LONDON (Bywire News) - Amid ongoing industrial action by the University and College Union (UCU), it’s now come to light that the basis for a massive cut to university staff pensions has effectively evaporated. The union is calling on the pension fund involved to quickly act – but also for its members and supporters to pressure the fund into changing its position.
A huge cut to pensions
Bywire News has been following the UCU story, which has seen large numbers of universities hit by week after week of strikes. The industrial action has centred around universities inflicting a 25% real-terms cut to staff pay since 2009. But UCU members have also been striking over their pensions.
The scheme that manages staff pensions, the Universities Superannuation Scheme (USS) is the UK’s largest private pension scheme. In March 2020 it did a re-evaluation of its fund and claimed that it had a deficit of £14.1bn – meaning there wasn’t enough value in the fund to pay people their full pensions. So, in coordination with university bosses, it put in place a cut of around 35% to members’ pensions.
Then, in February 2022 the USS revealed that the deficit had shrunk to £2.9bn – a fall of nearly 80%. Despite this, it still refused to budge on the 35% cut. Members of the UCU started legal action against the USS – claiming among other things that the fund’s managers had been repeatedly negligent in their legal obligations surrounding the valuation of the fund and its knock-on effect on staff contributions and eventual pay-out.
Now, the USS has said that the deficit has shifted again – but this time, to 0%.
Where’s the deficit?
On Thursday March 31, UCU revealed the minutes of a meeting of the USS’s Joint Negotiating Committee (JNC), a body where parties involved in pensions meet to discuss the fund. The union said that in this meeting the USS announced figures which showed that:
“Growth in the scheme’s assets of £22bn, soaring from £66.5bn to £88.8bn, has outstripped growth of liabilities, meaning that required deficit recovery contributions now stand at 0%”.
In other words, the USS doesn’t need to cut members’ pensions to make up for the fund’s shortfall any more. The minutes of the JNC meeting also reflects this – albeit with the expected vagueness and lack of commitment to actually doing anything. The committee noted [p3] that:
“the lower deficit would reduce deficit recovery contributions, leading to an overall lower contribution requirement”.
And it said [p1] that:
“If a similar position to that indicated by the monitoring was established at the next valuation, it may be possible to reduce contributions or increase benefits or some combination of both”.
That is, the USS and JNC are effectively saying: ‘well, things are looking good but we’re going to wait and see what happens before stopping the cut to your pensions’
UCU is not happy. So, it’s taking further action on the issue.
Time to stop the cut
First, it’s asking members to “lobby” their vice-chancellors (university bosses) over the USS scheme’s new valuation and the impact of this on their pensions – saying it wants them to tell the fund’s managers to reverse the 35% cut.
Second, UCU members and supporters can also sign a petition to the chair of the JNC – asking them to also tell the USS to stop the cut.
Overall, the UCU said the USS’s new valuation has ‘evaporated’:
“any justification for devastating pension cuts… The urgent need for UUK to revoke its cuts must be urgently called for… Failure to do so could lead to a staff exodus from higher education”.
Now, the UCU and its members have to wait and see if the USS budges on the 35% cut.
(Writing by Tom Cropper, editing by Klaudia Fior)