In this week’s LeedsUCU podcast we talk to Mark Taylor-Batty, the committee’s lead on pensions and a key part of the UCU national negotiating team which, backed by industrial action, has got our pension benefits restored as well as reducing how much we have to pay each month into them.

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See all the episodes and transcripts at https://www.leedsucu.org.uk/about-us/podcast/

Read Mark’s web post on this subject, including how to donate to the branch hardship fund, at https://www.leedsucu.org.uk/ucu-win-on-uss-increase-in-take-home-pay-and-benefits-restored/

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Episode transcript

Rachel

Welcome to the Leeds UCU podcast, for members of the University of Leeds branch of the university and college union. I’m Rachel Walls, one of your podcast hosts. I am also a UCU department rep for the Lifelong Learning Centre, branch committee member and saxophone and clarinet player in our occasional picket line band, Orchestrike!

Alan

And I’m Alan Smith, co-host for this podcast, and the branch’s administrator and organiser. We thought it would be useful for members of the branch to have an alternative channel for getting your local news, because reading long emails or website posts is not everyone’s first choice.

Rachel

We are here to be a friendly voice from the UCU University of Leeds branch, to help you keep you better in touch with what is going on, such as what the elected officers are working on and what opportunities there are for you to get involved in UCU discussions, socialising, activism and decision-making.

Alan

We’re joined today by Mark Taylor-Batty, who’s the committee’s lead on pensions and a member of the joint negotiating committee, which is a committee of the USS. Hi Mark.

Mark

Good afternoon.

Rachel

Hi Mark. So we thought we’d ask you today just to tell us a little bit about where we are. We’ve had this magnificent victory on pensions. So could you just explain that to audience members who might not be so familiar?

Mark

Sure. Yeah. Well, just to sum up what the UCU has won on pensions. So I’m one of the elected negotiators, which puts me on that JNC that joint negotiating committee of USS where we’ve been negotiating over the past, well, we were negotiating over the past year to make sure that we got a number of things. One of them was we wanted our pension back. We wanted the pension to be restored to where it was before it was cut in 2022. So we wanted the way in which it accrues, the amount of benefit that you that you bank each month, effectively, we wanted it back to where it was, the same level as it was in 2022. We’ve got that. So we’ve won that; pensions being restored back to its former levels. So the money we now earn for our pensions is the same as it used to be. What we lost between 2022 and 2024 because of those cuts, we have partially regained for members with an augmentation, because the easiest way of dealing with it was simply giving everyone the same lump sum as it were. So what’s happening is that everybody who was a member of the USS from the point at which this cut was, in the 1st of April 2022, to the 31st of March 2024, anyone who was a member or who joins during that time will get an additional £215 per year in retirement to make up for the amount of money that they lost towards their pension in those two years. That means they also get £645 added to their lump sum. For those people who retire before the 31st of March 2024, but were members after the 1st of April 2022, they won’t get the additional lump sum, but they’ll get a higher augmentation of annual pension. So there there’s a couple of little granular details there, but basically we got the restoration, and we got recovery for what has been lost between 22 and 24 now. We haven’t recovered everything between 22 and 24 for anybody who earns more than £44,000, right? So anyone who earns less than £44,000, you’re getting more in retirement than you lost – win! fantastic! – but anyone who earns more than 44 you’re not getting back as much as you lost in the cuts. But what happened in those two years was more money was put into the DC part of your pension. And you get to keep that. So there’s a kind of negotiated balance between those two things going on. So that’s part of the win. What we’re still doing, of course, is we’re negotiating and discussing on matters of stability because we don’t want them to keep running in and out of these theoretical deficits that have been causing the trouble over the past 10 years, and we want a proper valuation, so we’re still going into conversations about evaluation methodology so that we can avoid the kind of mess that we’ve been in. So what we’re seeing is, as I said, from April this year, 2024, we will get those restored benefits. But before that, we negotiated that the contributions towards those pensions would go down from January. So people will have seen recently in their in their pay packets, suddenly they’ve got a little bit more money or a lot more money in some cases, because the contributions for that restored benefits – to get more money back, we’re paying less – so instead of paying 9.8% of our salaries, we’re now paying 6.1% of our salaries towards that, that pension. So that feels like a really big win now, and, when we retire, we’ll feel the rest of the win when we start to get that extra money in income in retirement.

Rachel

Fantastic. Thanks, mark. And because we’re feeling that benefit, you know since the January pay package members of the branch recently passed a motion on using some of that money, as members choose, to replenish our hardship funds to support people claiming for past or future actions. So could you say a little bit more about that?

Mark

Yeah, I think we have to recognise that everybody has everybody who’s in the USS pension scheme has won here, right, regardless of whether they were a UCU member or not, regardless of whether, as a UCU member, they participated in that industrial action or not. I mean, I hope everyone did, but that may not have been the case. But everybody has benefited from industrial action. Industrial action has created these results that I’ve just outlined – we might have got some improvement without industrial action, but it certainly wasn’t going to be of the amount that we have won back. And, as a consequence, people have lost salary because they were on strike in order to get this gain for everybody. And what we’re asking is now that if you’ve got a little bit more in your pocket at the end of the month, can you afford to make a contribution to the hardship fund that helps to support those people who lose salary when they take strike action for your benefit? And that might be just a one off payment, you know £10 or £15, 50 quid, whatever you feel you can afford, you might want to set a standing order of £5 or a month. Why not, you know? Because you are gaining hundreds back now in in your pocket, but also hundreds or 10s of thousands, in fact, back in pension income in retirement. I did a rough calculation and I think that in 10 years in retirement you’re earning back four or five years of your UCU subs, you know, in terms of what’s been won, so it’s worthwhile getting something back in for people who took that action on behalf of you.

Alan

So, Mark, there could be implications of having more money in our pay packets – what, you know, you might call good problems to have, but there could be implications for some people, couldn’t there, so for example on tax bands?

Mark

Yeah, absolutely right, yeah, because we’re going down from paying 9.8 of salary to 6.1% of salary into pensions, pension contributions are made before tax is deducted, so if you pay less to a pension, then more money is available to pay towards tax. And so therefore some people who were teetering around the tax band, 40% limit, for example, the threshold for 40% tax is at £50,271 for example, if you were teetering just below that, then this changing contributions could have knocked you over and you’ll find that a small amount of your salary will be attracting tax at 40% and then everything before that was just 20%. Of course, if you’re extremely lucky and you’re earning around 100 grand or so, and I can’t quite remember what the higher tax band – where that starts – then of course you could end up into an even higher tax band for the high end, higher end of your salary. But I don’t imagine as many people in that situation. But it wouldn’t surprise me if a number of people were going to be experiencing this shift into a tax band. And one of the ways that you can obviously obviate that is by paying more into an AVC, an additional voluntary contribution into your pension to make sure that you are still using some of that tax free allowance by paying into a pension. And ironically, you know, I know there’s somebody I spoke to who by paying 2% more into their pension, they got £40 more salary because they were on that threshold. So the idea of paying more into your pension might be for some people, something they don’t want to do, but actually, if you’re sitting on that threshold, it could mean you have more take home pay. So it’s about being cautious when you’re sitting around that kind of threshold, that kind of barrier.

Alan

Yeah, so it’s probably important to say that we’re just flagging up those potential issues rather than giving financial advice, isn’t it?

Mark

Oh yeah, absolutely. We cannot legally give financial advice. It’s really for people to go away and check and see what their circumstances are, get financial advice if you think you need it – independent financial advice – and act upon that. But yeah, we’re just trying to flag this as a possible situation for ome colleagues.

Alan

And one of the issues could be for high income tax benefit charge for people getting child benefit?

Mark

That’s right, this is something that can sneak up on people unawares and there have been stories in the media over the years of people suddenly receiving bills for thousands of pounds because they didn’t know that this was happening. If you submit a self-assessment form every year then it will be picked up on automatically. But many people don’t, because we’re paying PAYE, aren’t we, most of us? And so, well, all of us in this industry, and so therefore many people don’t fill in these self-assessment forms and so these issues don’t get picked up. But, just let me outline what this is. So if you get child benefit, there is a limit to the net income that one of the parents or the guardians in the family is allowed to earn. So the higher earner of the family, if they have an adjusted net income of over 50 grand, that doesn’t mean to say a gross income of 50 grand, you need to go and look on the government website and do a calculation, but if you’re an adjusted net income as it’s described is over 50 grand, then a charge can apply, which is effectively the government saying you need to give some of that child benefit back. And as I say, it can be quite alarming if you’ve accrued two or three years of benefits when you haven’t technically been entitled to the full benefit amount and they can ask for that back. So it’s always worth our checking in on that, especially when something like this happens when you’re suddenly, you know, the envelope of your salary that is taxable has increased, and, again, one way of mitigating that, and there will be many others, is using tax free availability of an AVC paying more into your pension. But there are other ways and means of doing that and individuals might want to look into that. Don’t be alarmed but it’s worth checking if you’ve got child benefit and you’re around that threshold, if your salary is around that area, then you want to check whether or not that is a liable payment that you’ll need to make.

Alan

And in a similar vein, people with older children or supporting older children, there’s parental contribution towards supporting children in higher education that can be affected, can’t it?

Mark

That’s right, I wasn’t fully aware of this then a member on Twitter contacted me, or X as it’s now called, contacted me to point out that that she had realised that on the back of a tweet I made about these issues that this was going to be a thing. And I looked into it. So this is for people who are supporting children in higher education. And where there’s an implicit cost so. Whilst there is no parental contribution per se for students going into higher education, there is an implicit cost in as much as if your household earns more than £25,000 then you’re expected to top up the maintenance grants of your offspring going to university and I think the thresholds rise by about £5000. So there’s another threshold at 30,000, another at 35,000 and so on. And so when you go over each threshold in terms of household income, the amount of money that the student gets is reduced in line with that household income, meaning that there’s an implicit suggestion that the parents need to pay the difference and so, again, because you’re paying less into your pension, you’ve got more going into taxable income, that could knock you into another one of these increments, which could mean that you have to be paying, or, you know, that there’s not a legal obligation, but there’s a moral obligation and an implicit expectation that you will be topping up your child’s maintenance loan as they go to university. And so that’s something that people in that situation might want to look at and, again, there may be ways of mitigating that if you wanted to do so.

Alan

And finally in the good problems to have section, for members who are on really higher salaries, this could affect the lifetime allowance, couldn’t it?

Mark

Yeah, the lifetime allowance, although the government is abolishing the lifetime allowance now, the legislation hasn’t gone through Parliament yet, but the government has announced that from the 1st of April 2024 they are abolishing the LTA. So it’s still, it’s still relevant this tax year. Labour have said that if they get into government and let’s face it, they’re probably going to get into government, Labour have said that they’re going to bring it back because it’s a progressive form of taxation. I’ll explain it in a little in a little while. But it won’t be easy to reverse the removal of the LTA, so if Labour are going to bring it back, I wouldn’t expect it to be something that will happen, you know, next year or the year after. But it’s something that might need to be planned for. So the lifetime allowance is a progressive taxation because, as I said earlier, when you pay money into pension from your salary, it’s before tax, so it’s tax free money, right? It’s a really good saving from that point of view. When you put money into a savings account, it’s after you paid income tax on it. If you think of your pension as a saving tax [savings account?], you’re putting money into those savings before it’s taxed. So it’s really, really valuable from that point of view. And so of course it’s only fair that there should be a limit to the amount of money that you can put in over your lifetime. And so this lifetime allowance is the maximum amount of money that you are allowed to store away in a pension and, it’s difficult for a lot of people to work out what it is, but, it in the circumstances of the USS, it is the amount of annual pension income that your benefits dictate, multiplied by something like 23, so it’s 20 times – multiplied by twenty – plus the lump sum, which is three times the benefits amount, if you follow, that’s how they calculate how close you are to lifetime allowance. So whilst it might not look like you’ve got a huge amount of pension, if you times that benefit by 23 and it’s getting closer to £1,000,000, that’s when ordinarily you would need to start worrying because if you get it over that threshold, which is I think it’s 1,073,000 or something like that – it’s something of that order – if you were to go over that, then the amount that goes over you need to pay more tax on and you don’t want to be doing that and there are ways in which people have been mitigating against that they won’t need to again. But anyone who is in the fortunate position of being close to hitting that lifetime allowance, in this tax year, is now in a position of suddenly getting that little bit of extra boost in January, February, March, and I would imagine the number of people it’s going to affect, I could count on the fingers of one hand, you know within the university and possibly within the country, but people might want to be aware of it. Especially aware given that you might not think that you’re close to it, but more people are close to it than might think. And if you were to check your pension benefits and if they currently sit at somewhere between 30 and 40,000 £, which is a great pension to have, and I don’t think many people have accrued that much, but if it’s in that kind of area, you might want to look about what what’s going to be happening in the next few years, how close you would get to a lifetime allowance if it was going to return. So yeah, a nice problem to have. Not many people will have it. And as I say, the government is getting rid of it. There will still be limits, so, for example, I think the legislation will involve a limit to the amount of money you can take as a tax free lump sum when you retire. So currently, you know, when you retire, you get your annual pension and you get 3 times your annual pension as a one off lump sum at the point at which you retire and it’s tax free. So if you’ve got a 30 grand a year – sorry I know not many people will have 30 grand a year, but let me just use that for the sake of calculation – if you have a 30 grand a year pension when you retire, you would also get 90 grand as a tax free lump sum and then 30 grand going forward every year. But there will be a limit to the amount of that lump sum, so there will be some taxation limits that will still be happening, and when the when the legislation has gone through, we’ll be able to give more details about that. But as I say, not many people are going to be affected. And if you are affected then then good for you because, you know, you don’t really need to worry about much else – you’re in a good financial situation.

Rachel

Thank you very much, Mark. It’s really good to be aware of those implications. And gosh, I have learned a lot about pensions during this dispute from yourself and others. So we have one last question and that’s taking us away from the win that we had with pensions just to some recent changes that have been published by USS on early and late retirement. So could you tell us a bit about that please?

Mark

Yeah, sure. This is this is, as you say, it’s nothing to do with the win. It’s not a consequence of the win. Although perhaps it’s partly related to the manner in which they calculate the valuation in terms of projecting forward how much pay paying out pensions will cost. So let me explain. When you choose to retire early – and this has always been the case – USS will apply a factor to the benefits that you’ve accrued and reduced them by a certain amount. The reason for that is of course that let’s say I’m going to retire five years, really, it wouldn’t be reasonable for me to expect to get the benefits I’ve accrued from that point for five extra years before anyone else will be taking the equivalent pension at the normal pension age, right? I will be getting more money over time if that happens. So there’s going to be a small reduction so that over the amount of time that I’m retired I’m getting roughly the same as somebody who retires with the same level of benefits, but at the normal pension age. So there’s always going to be a reduction right? Similarly for people who retire after the normal pension age, which is currently 65, they get an increase because they haven’t taken their money out, right? So they’re banking it further so that there’s a factor that increases the amount of money over or you get more than 100% of whatever the benefit is that you have accrued which of course is very nice. Now in theory if it’s just about making sure that there’s a value equivalent, that the people who retire early and the people who retire late and the people retire at their pension age get the roughly the same amount of money accumulated over their lifetime in retirement, right? That should be kind of the idea, but in theory that means you never need to change the factors, because it’s very easy to work out what that equivalent should be. If I retire five years early, then you just simply divide down, on the assumption that that I’m going to survive so many years. You divide down what I’ve accrued against what somebody retiring at the pension age would would be. Sorry! I’m trying to simplify very complex and mathematical caculations, of course, but in theory that’s always going to be the same, is what I’m saying, in terms of value equivalents. But the USS of course don’t do it that way. They do it in terms of cost equivalents. What will it cost to the pension scheme to pay someone early over a longer period, and what will it cost the pension scheme to pay someone if they retire late. The problem that we would have in UCU, and this is something that we will discuss with USS, is that the way that they’re calculating that is based on the gilt yield. And if you’ve listened to the pension debate over the past three years, this notion of the gilt yield as being a factor that’s been applied is something that we’ve been challenging quite a lot because it has resulted in these exaggerated theoretical deficits over the years. So the way in which they discount the pension going forward is against the gilt yield. And let me explain what I mean by discounting, hoping that I’m not going into too much boring detail. So if I owe you £1000 and I don’t need to pay you £1000 for five years, I’m going to give you that £1000 in five years’ time. I don’t need to have £1000 in the bank now, I need to have enough money that will earn interest until it reaches £1000 after 5 years. So, the amount of money I owe you now I discount by the amount of money that I can grow in the interim. So, let’s say I discount it by 10%, I only need to have £900 because in five years’ time that will accrue interest to £1000, right? So, they have a discounting rate. So how much money do we need to have now to pay all this pension over retirement, right? And they are discounting in an excessively pessimistic way which means they feel that they need to keep more of our money, so they’ve changed the factors for early retirement so that you get less now if you retire, or rather from the 1st of April you will get less if you retire early than if you retire on the 31st of March or before, because the factors change from that date. The factors for late retirement improve from that date. So, this is not unusual, they do change the factors regularly. They could change every year. It’s the reason why they’ve changed them, that we are particularly worried and it’s not nice to see that people who want to retire early are going to get less after the 1st of April than if they were able to retire before the 1st of April. And also in relation to the win, it means that all the augmentation that we’ve won back is wiped out for people retiring early, depending on how early they’re retiring, and that’s disappointing to see. And the cynic would say that USS are clawing something back in that way. So whilst we come out of one dispute, we find ourselves niggling about something else. So, the calculations I’ve done seem to indicate that- and I would argue, based on the calculations I’ve done, just on a number of scenarios, is that the people who are retiring early are going to be paying – cross-subsidising – the people who are retiring on the on the pension age or later, right? The USS are saying the whole point is to make sure they don’t cross subsidise each other. But if you look at the actual accumulated amounts in a number of scenarios, whilst at the moment somebody who retires early five years early would need to live to 87 before they got the equivalent amount of somebody retiring at the normal pension age, you’re now going to need to live well into your 90s to get the same amount than somebody who retires at the normal pension age. So there’s a lot of detail there and there is a concern, that UCU are following up on with USS because we don’t think that’s reasonable or fair to change the factors as starkly as they are. But people who are in the process of thinking about retiring early obviously need to look at those factors and get financial advice. Because if they have recently got a quotation from USS, they need to make sure that that quotation has used the latest factors so they can make a decision based on those. And, whilst it’s regrettable to end on something of a negative note, I don’t think there are many people who are affected in this in terms of people who are thinking about retiring early now. But it will affect people retiring early for the next year or so, until the factors change again, and we would hope that they would improve at the at the next change. So it’s something we can still challenge in the interim, maybe even defer, but it’s not ideal and it’s where we are. Of course it’s great if you’re retiring later, you’re going to get even more than you may have been quoted. But I would imagine in our demographic, and in our industry which is so stressful and tiring, more people want to retire early than want to live through and keep plodding away and retiring late; that may not be a reality of our sector as much as it used to be.

Rachel

That’s a good point. Thank you, Mark. Really interesting to hear about all that.

Thanks very much to Mark Taylor-Batty pension lead for the branch committee and member of the national Joint Negotiating Committee for your time today and for all the work you have done negotiating to defend our pensions.

That’s all for today’s Leeds UCU podcast. Thank you for listening. Please subscribe on whatever platform you’re listening to us on, so you’ll know as soon as we publish our next episode.

Alan

If you’re not yet a member of UCU, head to ucu.org.uk/join to find out more if you work at the University of Leeds in an academic or academic-related professional or managerial role. Wherever you work, make sure you join the union for your workplace.

Rachel

This podcast is made on behalf of the committee of the University and College Union, University of Leeds Branch. If you have any questions or concerns please email our branch officers at ucu@leeds.ac.uk. See our website leedsucu.org.uk for alternative contact details and for a transcript of this episode.

This page was last updated on 15 February 2024