LONDON (Bywire News) - The ongoing industrial dispute between universities’ management and staff continues. But in the midst of the strike action, details about the pension fund at the heart of the row have emerged. And people are claiming it shows that cuts to staff pensions are nothing more than management ‘robbing’ them.
The University and College Union (UCU) has been engaged in industrial action against employer representative body Universities UK (UUK). By Monday 21 February, over 50,000 staff at 64 universities were involved in some sort of industrial action. The dispute is affecting one million students.
As Union News wrote, UCU’s action focuses on overpay, conditions and pensions:
- Universities have cut staff pay by over 25% in real terms since 2009.
- Half of the staff are “showing probable signs of depression”.
- Employers are giving staff “exploitative and insecure contracts”.
But university bosses are also planning to make a cut of 35% to people’s pensions. Naturally, staff were incensed. As UCU boss Jo Grady wrote in the Financial Times (FT), prior to even 2018:
“The scheme had been unnecessarily forced into a state of decline."
"For over a decade now, [pensions] managers have consistently underestimated the underlying strength of the scheme, its long-term viability, and the growth of its asset base. Actual asset growth has outstripped, by tens of billions of pounds, the doggedly pessimistic projections that formed the basis for the shuttering of the final salary section of the scheme”.
The Universities Superannuation Scheme (USS) is the UK’s largest private pension scheme. It manages assets, stocks and investments to give members a pension when they retire. But the USS was caught in the coronavirus pandemic crossfire. This is because the crash in the stock markets meant its value became less. Then, this in turn caused it to have a deficit, where the amount it was worth was less than it was supposed to be paying out to people when they retire.
The USS’s deficit stood at £14.1bn in March 2020. But as Grady noted, the USS valuing pensions investments in the midst of a global crisis seemed foolish, at best. And at worst, it seemed like pensions managers were intentionally trying to devalue the scheme:
“Without question, the nadir of this apparently disastrous mismanagement was in March 2020, when scheme managers insisted on proceeding with a valuation in the midst of the global economic shutdown”.
But now, staff have learned that all this appears completely unjustified.
The FT’s Josephine Cumbo reported that the USS deficit has shrunk to £2.9bn – a fall of nearly 80%. She noted that the scheme is now covering 97% of its member’s pensions (the “funding ratio”). So, bosses planned a 35% cut to people’s pensions now seems without justification. As one UCU branch said on Twitter:
“Further evidence from USS itself that they want to steal our deferred wages, and they know it. But we don't have to stick to the flawed 2020 valuation and we will stop the pension robbery!”
But will the news of the scheme’s finances make a difference?
As Union News wrote, USS bosses have:
“Until February 28 to determine what changes to make to the Universities Superannuation Scheme (USS) pension. UCU has submitted compromise proposals that were confirmed as implementable by the USS trustee which runs the scheme. UUK must decide whether to push ahead with cuts of 35% to university staff’s guaranteed retirement income or whether it is willing to work with UCU and resolve the pension dispute”.
Of course, the UCU dispute and the situation with the USS raises bigger questions about pensions more broadly. In an age where the state pension is no longer any kind of retirement guarantee (especially if you’re a woman of a certain age), more and more of us are having to go private. But when our future livelihoods are linked to volatile stock markets, that’s not any guarantee at all, either.
Moreover, from UCU to postal workers and BT via Robert Maxwell – private pensions have historically been a cash cow for rich individuals and corporations. So, maybe it’s time for people to look at other ways of securing their retirement. With crypto, offering means for individuals to invest away from the state and the system, a rethinking of pension is sorely needed. But currently, like UCU, people need to fight for their entitlements now.
(Writing by Steve Topple, editing by Klaudia Fior)