The changes fall under the University Superannuation Scheme, which are part of a wider pension reform, first published last October.
The University and College Union (UCU) held an initial vote and 87% of respondents supported industrial action as a response to them. However, the UCU is proposing a new vote given the latest changes made to the proposal.
These changes would effectively end with the current system of defined benefit pensions and establish a defined contribution (DC) scheme. Under a DC scheme, the pension fund invests the pension money into the stock market. Once the employee begins to receive his pension, its value is contingent to how the investments have performed.
Sally Hunt, the UCU general secretary, has described the proposal as “the worst I have received in twenty years of representing university staff”. She has called on to all staff to join the industrial action “with the aim of hugely disrupting (and not rescheduling) lectures and classes” as the only way of making employers listen.
In the same statement, Hunt cites a 2016 study by Tilney Bestinvest which estimates that “the same annual contributions made into a DC scheme would lead to a final pension worth around 20% of that in the defined benefit schemes”.
Higher education employers (substantially, Universities UK, or UUK) have proposed these changes as a way of addressing the USS deficit and the rise in the cost of future pensions. UUK argues that it is the only way of increasing the USS assets “without diverting money from teaching and research”. The fund’s deficit soared last year to £17.5bn, making it the “largest on record at any British retirement fund”. This poses an “underestimated” danger to the financial health UK universities that needs to be addressed.
As of today, the USS has not made any public statements regarding the new proposals.
The UCU will open a new industrial action ballot next Wednesday 29th November. The terms of the dispute are the employers’ “failure to agree to protect members’ pension benefits”. The first ballot papers will be with members on Friday 1st December at the earliest.