You may have seen the email to all members from the UCU General Secretary Jo Grady on the 25th September, concerning the members’ consultation about changes to the USS pensions scheme. USS members should also have received a formal invitation to that consultation. On Friday 6 October I led a webinar on this consultation. I talked through the consultation questions and their implications, and took questions. The recording of that webinar is below, followed by information which I included in my original invite to the meeting.
There has to be a consultation of members and of employers before pension changes are implemented, even if those changes are broadly positive. In this case, you will be pleased to learn that you are being consulted on whether you want your benefits to go back to where they were before they were cut in 2022, and to start paying less each month for that. I have been working hard on your behalf as part of an elected negotiating team, going to USS meetings once a month, and being involved in informal meetings with representatives of UUK, to achieve the UCU mandate of restoring benefits to pre-April 2022 levels. We are very close to the finishing line. You should note that this has only been possible due to industrial action. I know it doesn’t always feel like striking works, but this is evidence it has, and every month in retirement the income you receive will be higher because of the industrial action taken in the last year or on the USS issue. Some are saying that the improved financial situation of the USS made the restoration of benefits inevitable. As I am as close to the horse’s mouth as you will find, I can tell you that is definitely not the case: the headwinds were in the right direction, certainly, but we had to tack and navigate carefully with nuance and heads full of data, calculations and evidence to get towards the final destination.
Below my signature, fo those who want some more written detail and care about what members can still do via the consultation, I offer some thoughts that I expanded upon in the webinar.
Professor Mark Taylor-Batty
University of Leeds UCU Pensions officer
Member of the USS’s JN Committee
Restoration of benefits
While the restoration of pre-April 2022 benefits is on the cards, the consultation will ask if you want to pay a cheap as chips option for retaining the current reduced level of benefits. As that would be recipe for an inadequate pension income in retirement, and the opposite of what we have all been striving to achieve, that is not an attractive option. The restoration of full pre-April-2022 benefits could be achieved at somewhere between 6.2% and 8% of salary, as opposed to the current 9.8%.
Recovery of 2022-24.
We have been negotiating to get some pay-back for the benefits lost from April 2022, by using the amount in the notional ‘surplus’ that represents the amounts overpaid since then. Your support for this is important. As this change would be a universal benefit, it is not as required part of the consultation, but that is a space where you can mention it.
As you will recall, UCU and UUK signed two joint statements, in February and March, in which we agreed that we should together aim to make sure that the restoration of pre-April 2022 benefits should be achieved in a ‘demonstrably sustainable’ way. This means that we should be paying a contribution rate for those benefits that will make sure we do not end up in a notional ‘deficit’ again when we come to the 2026 valuation, and consequently risk falling back into dispute and being pressured to yet again see an increase in our contributions. The USS provided data on the cost of those returned benefits based on the latest valuation data, and gave that as needing a joint contribution rate of 20.6% BUT they heavily caveated this for employers, indicating in effect that this was not a demonstrably sustainable rate (a high chance of needing higher contributions again in the next six years). UUK’s actuary AON also indicated that a rate of 25.2% was a more sustainable benchmark rate. (This would imply a contribution from us of comfortably under 8%, down from 9.8%, for our restored benefits, and with much less risk of future increases or dispute). We expect employers such as Leeds, who have published statements about the need for a demonstrably sustainable solution, will reject the too low 20.6% figure on that basis, and I have already seen some results of the employers’ consultation that indicate this honouring of ‘demonstrably sustainable’ is happening across the sector. This is to be welcomed, though we do also anticipate that some employers will jump to the cheapest option for restored benefits, even if this is not demonstrably sustainable. The motivation here will be the huge savings that institutions can pocket from reducing their contributions. The University of Leeds, on a demonstrably sustainable basis, stands to ‘save’ over £12M annually in its staff costs budget. We do not yet know what the balance is of employer responses on this matter from their consultation, which ended last week. While 20.6% would have the attractive result of slightly cheaper contributions, the risk of them going back up again after the 2026 valuation (and the need again therefore for dispute) would be something we now need to focus on. It may seem odd that the trade union is the one arguing for a cautious, sensible and slightly higher contribution rate than some employers, but we made a public commitment to a demonstrably sustainable solution, and your negotiators all believe it is important to avoid future dispute by embedding a strong solution at this valuation, whilst restoring our benefits and gaining a lower cost for those.
This page was last updated on 12 October 2023