Chaos on campus?
It looks like staff from 61 British universities will take strike action next month as 88 percent of University and College Union (UCU) members voted in favour of the action.
The sector joins a growing list of UK businesses who are seeking ways to address their pension deficit. The row is a familiar one – the employer argues that the scheme cost is out of control while the members say they will lose out in retirement.
The Universities Superannuation Scheme (USS) runs a hybrid scheme in which defined benefit pensions can be accumulated on salaries of up to £55,550, with earnings above this threshold directed towards a DC scheme where retirement earnings depend only on returns from stock market investment. The plan to tackle the estimated £7.5 billion defined benefit pension deficit hole is to move all member’s earnings to a DC model.
The sweetener for members was a commitment to review the proposal in a few years. If the scheme conditions improve, DB could be reintroduced. And, members would still benefit from 18 per cent employer contributions while they could opt to contribute 4 per cent of their salary rather than 8 per cent.
It all sounds very reasonable, however UCU claim their figures show these reforms could
cut pension payouts by up to 40 percent – or £200,000 for an average lecturer over the course of their retirement. The solution it suggested was that the DB element of the pension should be retained, but with a lower accrual rate – this, however, was rejected.
This is a familiar story of course, but in this sector, it is a particularly bitter one coming so soon after another row on Vice Chancellor pay and benefits, which the UCU said showed evidence of one rule for the few at the top and another for everyone else.
Industrial action will begin with a two-day walkout on 22 and 23 February, escalating to strikes of three, four and five days in subsequent weeks which could lead to chaos on campuses across the country.
The USS is the largest remaining DB fund in the country not backed by government and there have been calls by some Vice Chancellors for a government backed solution. Sadly, there is no easy answer to the deficit problem faced by schemes and it’s easy to understand the frustration of both sides. It’s important however, to keep talking and to keep the lines of communication open so that alternative and innovative solutions are discussed.