USS members could face 35% DB pension cut under UUK proposals - UCU

A typical Universities Superannuation Scheme (USS) member could face a 35 per cent cut to the defined benefits (DB) that will be accrued in the future under proposals from Universities UK (UUK), according to a new modelling tool from University and College Union (UCU).

The tool, developed by First Actuarial, showed that, under the proposals, a typical USS member aged 37 and earning £41,526, the current starting salary for a lecturer, would build up an annual guaranteed pension of £12,170 if they work full time until 66.

This compared to the annual £18,857 that they could build up under the current arrangement, with UCU warning that this 35 per cent cut would also apply to the guaranteed cash lump sum members receive upon retirement.

In light of the findings, the union has urged employers’ representative UUK to “come clean” over the true impact of recent USS pension proposals, warning that they would “devastate the finances” of university staff, particularly workers at the start of their career, and risk “collapsing the scheme entirely”.

UCU general secretary, Jo Grady, stated: "UUK is trying to hoodwink staff into signing up to pension proposals which fall apart at the first sign of scrutiny.

“Reducing the level and the security of benefits will pull the rug from under people’s retirement and threaten the viability of the entire scheme as people question why they should remain a part of it.

"Our modeller shows the impact of UUK’s proposals falls particularly hard on those at the start of their careers, who are more likely to be on low pay, and on casualised contracts - it is incredible that USS and UUK are trumpeting these proposals without providing any meaningful information about the impact on staff. The plans would further cement a two-tier workforce.

"The answer to concerns about the scheme's affordability is for vice-chancellors to show the same faith in higher education that their staff do – and to listen to the experts who say the scheme is sustainable.

"Increased guarantees from employers on staying within the scheme must be matched with a concerted effort to push back on bogus claims that defined benefits are unaffordable."

She added: "University staff have had their pay held down by employers for years, they will not stand for USS and UUK colluding to slash their pensions.

"In the coming days members will formally decide the next steps in the union’s campaign to defend USS pensions. Should USS and UUK continue down their current path, we cannot rule out industrial action."

The union previously warned that industrial action was "likely" over the proposed changes to the scheme when the consultation was first published, later calling on members to prepare for industrial action in light of the "unnecessary and damaging cuts".

However, UUK previously stressed that reforms are needed considering the scale of the deficit reported, as was recently echoed by the Russell Group, with the consultation seeking to ensure "proportionate" reforms that are in the best interest of members.

Furthermore, responding to the latest concerns, UUK has emphasised that whilst it would be willing to consider alternative proposals, no change is not an option.

A spokesperson for UUK, on behalf of USS employers, said: “Employers would be very willing to consider alternative, feasible and affordable proposals from the UCU to tackle the scheme’s financial challenges – so far the union hasn’t put forward any possible solution. Unfortunately, no change is not a viable option.

“The UCU should be open with USS members about the scheme’s financial challenges and the choices facing them rather than promoting a modeller like this, which only tells part of the story.

“The modeller does not allow scheme members to compare possible benefit changes against the cost of maintaining current benefits through higher salary contributions.

“Staff need to decide if they want to pay much more – tens of thousands of pounds over a lifetime – to maintain benefits or continue to pay the same rate and accept moderate benefit change, which UUK has proposed.

“UCU should also be honest with USS members about the severe implications – including job losses – of employers paying much higher contributions.”

The scheme's valuation process has already faced a number of issues, with both UUK and UCU warning against "unaffordable" contribution increases, after the scheme's 2020 valuation update suggested they may need to increase to 56.2 per cent of payroll.

This prompted calls from UUK for a review of the 2020 valuation approach, with UCU also backing calls for employers to "challenge" the USS valuation approach, and some branches calling for industrial and legal action in response to the pension issues being faced.

USS has since rejected the call for a further review of the valuation, however, arguing that "the most productive way forward" would be working with UUK on its ongoing consultation.

    Share Story:

Recent Stories



How the bulk annuity market is changing
Laura Blows speaks to Peter Jennings and Prash Mehta from Just about trends in the bulk annuity market and how this could impact trustees hoping to secure insurer engagement in 2022 and beyond
DC master trusts
Pensions Age editor Laura Blows, editor of Pensions Age look at developments within the DC master trust market with Paul Leandro, partner at Barnett Waddingham, and Mark Futcher, partner and head of DC at Barnett Waddingham.

Advertisement Advertisement