University staff back revised USS reform plan

Staff at pre-1992 universities have voted by two to one in favour of accepting plans to end the country’s largest private final salary pension scheme

January 26, 2015

Some 10,538 members of the University and College Union voted to accept a deal put forward jointly by the UCU and employers to reform the Universities Superannuation Scheme, while just 5,168 voted to reject it, according to results published by Electoral Reform Society on January.

It means 67.1 per cent of those who voted favour the proposals and 32.9 per cent were against them.

A total of 40,215 UCU members at pre-1992 universities were eligible to vote in the ballot, which ran from 16 to 26 January and was run by the Electoral Reform Society on behalf of the UCU, but just 39.1 per cent did so.

If the changes are adopted, they will affect about 150,000 university staff who currently pay into the USS, of whom about three-quarters are in the final salary scheme.

It follows a decision to suspend a marking boycott, which ran for two weeks in November, to consult union members on an improved deal on pension reform.

Critics of the plans claim some staff could lose as much as a third of their pension income, leaving some staff unable to retire due to their low retirement income.

Under the deal to cut an estimated deficit of £20 billion, pension payments towards a final salary pension would cease in March 2016.

Benefits accumulated under the scheme up to this point would be protected, but will relate to an employee’s salary in March 2016 (uprated annually by inflation) rather than their final salary on retirement.

All active members of the USS will start to pay into a scheme where benefits are calculated on the basis of career average earnings, otherwise known as Career Revalued Benefits (CRB).

In the new scheme, defined benefits will be based on an accrual rate of one-75th of pensionable salary, rather than the previously mooted rate of one-80th, which is the current accrual rate. This will result in a higher annual pension for members compared with the previous proposed reforms.

Employee contributions will also rise to 8 per cent of salary, up from the 6.5 per cent outlined in the October plans.

Employer contributions will rise from 16 per cent to 18 per cent of salary until at least 2020 – a period in which the next two valuations of the USS will take place.

In addition, members will be able to earn CRB benefits on the first £55,000 of their salary, compared with the £50,000 initially proposed in October. Beyond £55,000, employers will pay 12 per cent of salary into a defined contribution scheme and staff can top it up by paying in an extra 1 per cent that would be matched by employers.

The plans will now be discussed by UCU branch representatives at a special conference in Manchester on 28 January ahead of a meeting of the USS Joint Negotiating Committee, which comprises UCU and employers’ representatives, the following day.

A Universities UK spokesman said the JNC meeting will include a vote on the reform package, which would then be subject to statutory consultation with employees from March 2015.

“We are pleased that UCU members supported the joint UUK/UCU proposal for reform of the USS and have chosen not to restart a marking and assessment boycott,” he said.

“This outcome follows more than a year of constructive discussions and negotiations to develop a viable joint proposal,” he added.

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Reader's comments (4)

This is a massive defeat for the UCU. Given the USS pensions crisis was spotted at leat ten years ago, to end up here is a level of incompetence rarely seen. I imagine our bosses must be laughing themselves sick, for smart people we are really stupid. The new plan is a complete mess with enough loopholes to drive a bus through.
Well Jim, I have to admit that your prediction in 2011 that the FS scheme would wind up has proved correct, but maybe even sooner than you expected. The real irony is that the 'improved' offer, 1/75 accrual instead of 1/80 in return for a 1.5% employee contribution, is actually worse value for money than the existing offer, in terms of the number of years that you have to collect your pension before you get back your money (in capped-CPI terms). The investment return on tying up the contributions for several decades is negligible. Or that about 7% of the employer contribution into the scheme for all members will continue to go entirely to reduce the deficit in the FS scheme. Or the joke of the 1% matched top up. All those sub-50 pound monthly contributions will not make much of a pension. I can imagine that this will give the go-ahead to the USS to shift into gilts at lowest-ever long-term interest rates - -1% real - so that even when markets normalise, the fund will still be stuffed. My guess is that a DC scheme at 12% + 8% will provide a better pension than this woeful CRB. The upper echelons have worked that out.
You are right, its 1 year ahead of where I guessed. I also agree 20 % in MP is better than this. Thats why I am so cross with UCU, they refused to do 'numbers' so they have ended up like true Bonco Booth marks picking the empty cup. UCU felt the USS fight was a way to drive up membership. As UCU left have pointed out, UCU failed to motivate staff for the confrontation necessary. So staff were left with the worst of all worlds an incompetent union fighting for in my own estimation untenable demands (and given the Union statement prior to the vote, untenable in their own minds) with no thought out back up position (hence get the worst solution) and lacking the militancy to actually fight for their demands. It is this hysterically demonise the opposition but go along with it in the end pragmatism that is destroying the soft / middle road left. UCU left demonise the USS proposal but unlike UCU they were I believe prepared to fight hard. @Physicist I disagree the question is not FS or MP, but what the pension is. There are almost no FS schemes left in Industry. What was needed was a hard headed
@Physicist What was needed was a hard headed plan to get the most for members and to protect the lowest paid, this meant understanding pensions.