USS review group fails to agree pension changes
UK - The Joint Review Group (JRG) of the £28bn (€33bn) Universities Superannuation Scheme (USS) has been disbanded after it failed to reach an agreement to changes to the pension scheme, including a move to a career-average structure.
In 2008, the USS Joint Negotiating Committee (JNC) established the JRG to review the scheme and determine changes to be made to keep it a sustainable and affordable defined benefit (DB) pension plan.
The JRG, which comprised of both employer and member representatives and an independent chair, had agreed that a decision on changes would be made by the end of April 2010. However, failure to reach an agreement means the group has been dissolved.
Nevertheless, at the latest meeting of the JNC on 30 April 2010, the committee received two sets of formal proposals from the employer and member representatives.
Sir Andrew Cubie, chairman of the JRG and JNC, said: "I am extremely disappointed that, despite the considerable endeavours of both the employer and member representatives over the past months, the JRG has been unable to find an agreed solution to the funding challenges that face USS."
However, Sir Andrew added that the formal proposals tabled by the employers and the University and College Union (UCU) would be considered in detail within the JNC mechanism, with the next JNC meeting scheduled for 7 July 2010.
Sir Martin Harris, chairman of the USS trustee company, said: "I am also disappointed that no agreement has been reached, and I give my full support to both the employers and UCU in continuing to seek a satisfactory conclusion."
The proposals put forward by the Employers Pension Forum for Higher Education to the JNC include a rise in the normal retirement age for all active members to 65 years, and the introduction of a career average revalued earnings (CARE) section for new entrants, alongside an increase in member contributions to 7.5%.
In response, a spokesman for the UCU said the employers within USS are using "current rhetoric about being tough on pensions to talk up a pensions crisis in the sector".
He added: "The evidence shows the USS scheme is not about to collapse nor is it in dire straits. Working from the evidence available of what the scheme needed, UCU proposed a modest increase in employee contributions, along with an increased retirement age for new entrants and a cost sharing mechanism should increases be required in the future. The employers came back with a hike in members' contributions, a freeze on their contributions, and an inferior career average scheme."
As a result the UCU said it expected to consult members affected by the proposed changes in a ballot starting next week.
But commenting on the employer proposals, Nicola Dandridge, chief executive of Universities UK, warned: "Recently announced cuts, together with the possibility of further severe reductions in higher education funding over the short to medium term, means that university expenditure will need to be significantly reduced.
"Pension costs need to be closely controlled and future risks minimised. Without these changes the increasing pension costs will inevitably have an impact on staffing levels and what universities are able to offer their students."
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