‘Why universities need to pay more to protect USS pension rights’ - University of Essex vice-chancellor

Anthony Forster, vice-chancellor of the University of Essex. Picture: JANUS VAN HELFTEREN

Anthony Forster, vice-chancellor of the University of Essex. Picture: JANUS VAN HELFTEREN - Credit: Archant

In a blog, Professor Anthony Forster, vice-chancellor of the University of Essex, explains why he disagrees with Universities UK’s position on USS pension reform.

His remarks (below) come as the University and College Union plans a wave of industrial action starting on February 22 in a dispute over pensions. As many as 42,000 staff at 64 institutions, including Essex, Oxford and Cambridge, will walk out on Thursday and Friday in the first of 14 days of strikes that run until March 16.

The universities affected by strike action will seek to have plans put in place to minimise disruption to students. It is likely to be the worst industrial action at universities in modern times, and there are concerns the strikes could escalate and lead to the cancellation of final-year exams due to possible further action in April, May, and June.

Essex UCU president Catherine Crawford has previously said that 91.2% of academics at the University of Essex voted in support of strike action if necessary, with a “strong” turnout of 61.5%.

The UCU, which represents lecturers and campus staff, is in dispute with university chiefs over pensions. Vice-chancellors have proposed changes meaning that academics could lose up to half their retirement income, according to analysis.

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A Universities UK spokeswoman said: “The USS pension scheme has a deficit of £6.1 billion and the cost of future pensions benefits has increased by one third since 2014.

“To maintain current benefits overall contributions would have to increase by approximately £1 billion every year.

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“We hope that employees recognise that changes are necessary to put the scheme on a secure footing, and that the proposed strike action will only serve to unfairly disrupt students’ education.”

Anthony Forster, vice-chancellor of the University of Essex (blog post)

Is there an alternative to the strike set to hit universities (this) week?

The overwhelming vote by UCU members for 14 days of strike action in 61 universities indicates the strength of feeling about the proposed changes to the Universities Superannuation Scheme (USS). For many of us it is the most important issue that we have ever had to confront that relates to our pay – and it will have consequences not just for current academic and professional services staff, but future generations as well.

So how have we got to this position?

During last year’s consultation on the future funding of USS, we held an open meeting with our staff to help inform the response the Council of the University of Essex would make to the consultation on the future of the pension scheme. This input from staff led to our University Council adopting three key positions. These remain unchanged and we continue to be an advocate for them.

- We believe high quality pension arrangements are a significant part of the benefits available to our employees.

- We feel the USS Trustees are being overly prudent in their assumptions, which will potentially undervalue assets and overestimate potential liabilities.

- At Essex we are prepared to consider increasing employer contributions to the scheme, alongside increases in employee contributions, in order to sustain critical features of USS, including defined benefits.

Adopting these positions will safeguard key elements of USS and avoid a highly disruptive strike that places staff who are members of UCU in the agonising position of balancing their support for student learning, with their commitment to their trade union and a legitimate desire to be a member of a high quality pension scheme.

To date we have failed to win over most universities to our view, with 109 employers stating in their responses to the UUK survey that they would be unwilling to increase employer contributions beyond the current level of 18% of salary – with only seven indicating that they were prepared to pay more into USS to safeguard a high quality pension scheme. Sometimes principles cost money.

In addition, a majority of universities support the USS Trustees in introducing additional elements of prudence into their valuation methodology to reduce the risk of employers having to make additional contributions to the scheme to safeguard benefits should circumstances require this at some point in the future.

As a result, we now have proposals on the table which would see no further benefits being accrued in the defined benefit sections of the USS – neither the final salary nor the career revalued sections. Instead, all contributions will go into a defined contribution section termed the USS Investment Builder.

The net impact is a significant reduction in the certainty with which USS members can plan for their retirements. This is bad news for current USS members; as 960 professors have indicated in an open letter to THE [18/01/2018] it will further reduce the attractiveness of the UK as a destination in the global market for talent; and it poses a significant risk to our ability to attract new entrants into the academy.

There is still time to find common ground that will avoid a costly strike that will be painful and disruptive for all sides. UCU members at Essex have told me they are heartbroken to have to take strike action which they now feel is the only option left to them to express their dismay – and our students have told us that the impact of strike action on their learning experience is a source of consternation to them, at an absolutely critical time in the academic year.

We know our staff value the defined benefit component of USS and to retain it we may need to accept this will need to operate at a reduced level, to ensure the scheme is more sustainable and affordable than at present. Likewise university employers must step up to the plate and commit to increasing employer contributions to the scheme, alongside increases in employee contributions, to safeguard what staff tell us is one of the most important elements of the current scheme.

USS is a nationally negotiated scheme and we are bound by the majority view. Whilst the ‘Essex position’ places us in a minority of employers, we will continue to advocate the goal of safeguarding a high quality and sustainable pension scheme for USS members and use our position on the USS Institutions’ Advisory Panel to do so.

The shared interest of all stakeholders should place an obligation on all parties to look to find imaginative and sustainable ways of delivering this goal – principled compromise is the answer.

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