USS and UK accused of failing to respond clearly to defined benefit reduction proposals
The UCU also today launched a pension modeling tool USS
The Universities and College Union (UCU) accused Universities UK (UUK) of failing to explain the real impact of the Universities Superannuation Scheme (USS) pension proposals.
This comes as the UCU launched today (May 28) a USS pension modeling tool, developed by First Actuarial.
The tool allows members and potential members of the USS to see the impact that the UK’s proposals would have on their defined benefits. For a typical USS member, it shows a reduction of more than two-thirds (35%) in defined benefits that will be accrued in the future.
The USS – the UK’s largest pension scheme – is currently conducting a 2020 assessment and has said contribution rates need to increase by 9.6% currently for members and 21.1% for employers for address funding issues.
UCU and its First Actuarial advisers, as well as UUK Aon advisers, argued that the 2020 valuation increases “are not warranted.”
The UK has now proposed major changes and reductions in the guaranteed defined benefit (DB) element of the scheme to keep contributions at their current rate.
His proposals to reduce USS retirement benefits include lowering the salary threshold when PD accumulation stops from £ 59,883.65 to £ 40,000, reducing the accumulation (and therefore the amount retirement payments) from 1/75 to 1/85, and the imposition of consumer price indexation. 2.5% ceiling (removal of the protection of benefits against any inflation above this level).
The UCU said it would “drastically reduce the guaranteed retirement income of USS members, hitting hardest on those early in their careers, who are more likely to be on casual contracts, on wages. lower, have substantial student debt and have fewer assets “. .
The union said it would also create a “two-tier workforce” and that it is “particularly irritating when the UK proposes not to increase employers’ contributions to the scheme”.
The UCU also said that further industrial action “could not be ruled out if the USS and the UK disregarded the advice of a joint expert group,” which confirmed that the program was viable and that defined benefits could be made more affordable.
UCU General Secretary Jo Grady said: “The UK is trying to trick staff into signing up to pension proposals which crumble at the first sign of scrutiny. Reduce the level and benefit security will pull the rug out of people’s retirement and threaten the viability of the system as a whole, as people wonder why they should be a part of it.
“Our modeler shows that the impact of the UK’s proposals is especially hard on those starting their careers, who are more likely to be on low pay, and on casual contracts – it’s amazing that USS and UUK are slamming these proposals without providing any meaningful information on the impact on staff. The plans would further consolidate a two-tier workforce. “
She continued: “The answer to concerns about the affordability of the program is for vice-chancellors to show the same confidence in higher education as their staff – and listen to experts who say the program is viable.” Increased guarantees from employers to stay inside the plan must be accompanied by a concerted effort to push back against false claims that defined benefits are unaffordable.
“University staff have seen their salaries withheld by employers for years, they will not stand when USS and UUK agree to cut their pensions. In the coming days, members will formally decide on the next steps of the campaign. union to defend USS pensions. If the USS and the UK continue on their current path, we cannot rule out industrial action. “
A UK spokesperson on behalf of USS employers said: “Employers would be very willing to consider alternative, feasible and affordable UCU proposals to address the financial challenges of the program – up to now the union has not come up with any possible solution, unfortunately no change is not a viable option.
“UCU should be open with USS members about the financial challenges of the program and the choices they face rather than promoting a modeler like this, who only tells part of the story. The modeler does not allow plan members to compare possible changes in benefits with the cost of maintaining current benefits through higher employee contributions. “
They continued: “Staff must decide whether they want to pay a lot more – tens of thousands of pounds over a lifetime – to maintain benefits or to continue paying the same rate and accept a moderate change in benefits, which the UUK proposed.
“The UCU should also be honest with USS members about the serious implications – including job losses – of employers paying much higher dues.”
Find out more: USS answers questions from employers on the valuation hypothesis