Following our article about pay and conditions, we're moving our attention to the second UCU ballot topic - the Universities Superannuation Scheme - to give you some information on the pension scheme and the proposed changes.
Last week, we gave you some information about the University and College Union (UCU)'s pay and conditions ballot. This represents one of two ballots its members are being asked to consider.
This week, we're moving our attention to the second UCU ballot topic - the Universities Superannuation Scheme (USS) to give you some information on the pension scheme and the proposed changes.
Why are we talking about pensions?
We recently informed you of the UCU ballot, where members of the trade union are being asked to vote in favour of industrial action in relation to:
- Pay and working conditions
- The Universities Superannuation Pension Scheme
This is important to you because it may impact your lecturers and in turn your education.
What is a pension?
A pension is a regular payment that is made to a person during their retirement. There are many types of pension, and USS is a private pension. This means that the regular payment comes from a fund that the person (and their employer) has contributed to during their working life. The total in the fund is invested in assets, which means the value of the fund can be higher or lower than the actual contributions depending on the value of the assets held.
There are two main types of pension:
- A defined contribution scheme (the amount you receive when you retire is calculated based on how much you pay in or contribute to your pension fund).
- A defined benefit scheme (the amount you receive when you retire is calculated based on how long you’ve worked for your employer and your salary, and is not related to how much you have contributed to your pension fund).
You can find out a bit more about these two main types of pensions by checking out these resources on the government website.
Who is USS Limited?
USS is the largest private pension scheme in the UK and is the main pension scheme for universities and higher education institutions in the country. The scheme is run by Universities Superannuation Scheme Limited and provides retirement benefits to academic staff, alongside some other benefits like ill-health benefits and life insurance.
This is a hybrid pension scheme, so members receive both a defined benefit element (a portion dictated by their salary and their time with their employer) and a defined contribution element (a portion dictated by the amount they have contributed to their pension fund).
Schemes like this are increasingly rare, as they are difficult to sustain when retirement benefits due to members are not only dependent on members' contributions to the pension fund. In the UK, 89% of private defined benefit schemes no longer accept new members, and 48% of private pension schemes offer no defined benefit element.
Why is it being balloted for action?
In 2017, USS proposed the closure of their defined benefit scheme entirely due to a growing deficit – this resulted in 14 days of strike action by the UCU in 2018 and the defined benefit scheme element was not closed.
In March 2020, USS conducted a valuation of the pension scheme and claimed that contribution rates needed to increase very significantly from the rate of 30.7% of salary (9.6% for members, 21.1% for employers) that was established under a 2018 valuation.
In August 2021, UCU's elected negotiators and professional actuarial advisors tabled a set of fully costed alternative proposals for addressing the 2020 valuation, which USS confirmed could be implemented.
Universities UK (the collective voice of universities in England, Scotland, Wales and Northern Ireland) later agreed on major changes to the defined benefit element of the scheme with USS, to support the scheme's sustainability and prevent employers and employees from having to pay higher contributions identified in the 2020 valuation. These changes were formally approved in February 2022 and came into effect from April 2022, impacting only benefits built up after this date.
The changes to the scheme impact the level of retirement benefits that members of USS can accumulate moving forward. These changes impact all scheme members differently, as they are dependent on a number of factors like the amount of time they have been a member of the pension scheme, their annual salary, and their planned retirement age. The USS website provides examples of the impact on individuals in a range of circumstances.
UCU’s “Strike for USS”
Many (but not all) UCU members are also members of USS. As UCU campaigns and lobbies on behalf of its members' interests, they are balloting members' views of undertaking industrial action in relation to these proposed changes with the aim to:
- Avoid future changes to benefits and/or increases in member contributions.
- Ask for a new approach to the valuation of the pension scheme assets.
You can find out more about the UCU campaign in relation to USS by visiting the UCU website.