UK universities have backed changes to the Universities Superannuation Scheme (USS) despite strong opposition from the sector’s main staff union.
The Joint Negotiating Committee – made up of representatives from Universities UK (UUK) and the University and College Union (UCU) – announced a proposal yesterday to shift the scheme to defined contribution from 1 April 2019, in line with UUK’s initial proposal made last year.
USS is currently a hybrid scheme, with a cap placed on defined benefit (DB) pension accrual.
The latest proposal contains a commitment from the universities and the £60bn (€68.6bn) pension fund to consider reintroducing a DB guarantee if the scheme’s funding position has improved. It has been submitted to USS for consideration and will be subject to a university staff consultation starting in March.
UUK said it had also tabled a proposal for a “lower cost” DC option, allowing staff to contribute 4% of salary rather than the current 8%. Employers would continue to contribute 18%.
A UUK spokesperson said the proposal would help address the scheme’s shortfall while keeping contributions affordable for both staff and employers.
The scheme reported an official deficit of around £5bn following its 2017 actuarial valuation, but other calculations have put the shortfall as high as £12bn-£17bn.
It has said the cost of funding future pension benefits had increased by 35% and that contribution increases of six to seven percentage points could be required.
Despite yesterday’s agreement UCU indicated that it would go ahead with strike action, which would affect 61 of 68 higher education establishments across the country, including Oxford and Cambridge universities. The union has maintained throughout the discussions that USS should seek to retain some form of DB accrual, and that concerns regarding the deficit were overblown.
Union members voted overwhelmingly in favour of 14 days of strikes, the UCU said on Monday.
UCU general secretary Sally Hunt said university staff would feel “utterly betrayed by their leaders” following the committee’s proposal.
“Universities must be on notice that unless there are dramatic changes in their negotiators’ position then strike action will be arriving on campus next month,” she added.
The UUK claimed the union’s proposal “would have increased financial contributions to unmanageable levels for employers and many employees”, upping staff payments by more than a third and adding £500m to the collective bill for employers.
“Employer contributions have already risen by 30% over the last decade and further increases are not affordable,” the universities representative body stated.
However, the vice-chancellors of two leading universities – Warwick and Loughborough – have voiced support for retaining an element of DB benefits and urged the negotiators to revisit their plans.