Commenting on the UCU proposal to complete the 2020 valuation, a spokesperson for USS employers, says:
“We had already shared the initial UCU proposals with USS employers two weeks ago, asking for their views. Today’s costings, confirmed by the USS Trustee, now allow for a formal consultation with all USS employers on UCU’s formal proposal, which has commenced today. This consultation asks employers to confirm whether they will provide the necessary covenant support and their willingness to pay an additional c£200 million annually from April 2022, and an extra £330 million from this October 2022 – and ultimately c£700 million more each year from April 2024 – on top of the current USS pensions cost of around £2 billion per annum.”
“To date, employers have given a clear message throughout this valuation that the current contribution rates are at the limits of both affordability and sustainability – and paying more would have a significant and detrimental impact on the sector’s collective ability to delivering high quality education and research. An additional £200m is equivalent to nearly 5,200 full-time roles across the university sector. By proposing such high costs for employers and members, the union is asking employers to put pensions before other university priorities including the student experience, pay, and the jobs of its members.”
“We continue to meet regularly with UCU to try to find an affordable and viable solution to this valuation by the end of this month to prevent the introduction of damagingly high costs for both employers and scheme members.”
- Under UCU’s proposal to the Joint Negotiating Committee, employer contributions would rise from 21.4% of salary, to 23.7% from April, to 25.2% in October and then increase further every 6 months, until they reach 29.1% of pay in April 2024. For scheme members, contributions would go up from 9.8% to 11% of salary this April, and again to 11.8% of salary in October 2022 - with further increases every 6 months until member contributions reach 13.9% of pay in April 2024. However, UCU is also proposing that employer contributions could be capped at 25.2% and members at 9.8% at 31 March 2023, based upon a 2022 valuation concluding ahead of 31 March 2023 – but it is not clear how this could be agreed.
- Data from the Universities and Colleges Employers’ Association (UCEA) shows that the overall impact from strike action taken in December 2021 was low. Figures indicate that only one in three UCU members took strike action, accounting for only 9% of all staff at institutions eligible to take part.
- The USS Trustee says scheme changes need to be agreed by the end of February – to avoid the start of the punishing and unaffordable cost escalator in April which would see the already high member and employer contribution rates almost double over the next three years.
- Only one in ten Defined Benefit schemes (that guarantee pensions) in the UK remain open to new members. The solution proposed by employers ensures USS will be among these.
- There has been a 53% increase in the level of employer salary contributions to USS since 2009 (14% in 2009 to 21.4% October 2021).
- The employer contribution to USS – 21.4% of salary – is over two and a half times the average employer contribution rate in FTSE 100 companies (8.3% according to a survey of FTSE 350 employers).
- With the changes to benefits proposed by employers, USS members will still receive far more than the average occupational pension, which is £9,464 per year according to the Department of Work and Pensions.
- A USS member earning £30,000 per annum who has already been in the scheme for 3 years is estimated to receive £14,550 each year in retirement if they continue paying into the scheme until that time.
- Only 44 of 340 USS employers are facing the possibility of limited further strike action. UUK takes its mandate for negotiations from all 340, who pay the same level of contributions and have jointly given significant financial backing to the scheme worth £1.3 billion a year.
- The latest information published by the USS Trustee indicates that carrying out a new valuation of the scheme will not result in an improved financial position, as while the deficit has reduced, the cost of future pension payments has in fact risen.