Universities UK response to UCU reballot results

19 Jan 2022

Commenting on the UCU reballot results, a spokesperson for USS employers said:

“Students will be dismayed that the union is considering more strike action yet still not proposing any solution to this dispute. We will be considering the responses to the recent scheme member consultation fully with employers, UCU and USS in the coming weeks. The USS Trustee has stated, however, that any further changes need to be agreed quickly – 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. No employer has indicated any willingness to pay such exorbitant costs – and we know that if these higher rates go ahead they would have devastating consequences for many employers and price more members out of the scheme.

“We remain prepared to consult employers on any reasonable, affordable and implementable proposal from UCU, including on the level of covenant support they could afford to offer it. Meanwhile, we continue to progress work on possible alternative scheme design, a lower-cost option and shaping an independent review of scheme governance. We’re calling on UCU to take part in all these discussions on the scheme’s future because it is important that the views of scheme members are represented.”

Notes to editors

  1. Universities Superannuation Scheme (USS) is one of the largest private pension schemes in the UK and is the principal scheme for academic and comparable staff in UK universities and other higher education and research institutions. Universities UK represents the views of 340 higher education employers on USS.
  2. 7 of 22 institutions reballoted met the required legal threshold to take strike action over USS. Of the institutions that failed to reach the legal threshold in the reballots, several are large employers who account for a considerable proportion of the scheme’s active membership.
  3. 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.
  4. Two-thirds of institutions (66%) reported that less than a quarter of teaching was affected, and more than half (58%) reported a low impact on the delivery of other activities.
  5. 68% of institutions also reported that the impact from the December 2021 strike action was lower than the 2019 industrial action.
  6. To secure the guaranteed ‘defined benefits’ section of the scheme (a key aim of UCU), employers agreed to give unprecedented financial backing to the scheme, known as ‘covenant support’, worth an additional £1.3 billion per year. Defined benefits schemes are increasingly rare in the UK, with the vast majority having already closed to due increasing costs.
  7. This is in on top of the proposed employer contribution rate of 21.4% of salary, which is over two and half times the average non-matched employer pension contribution in FTSE 100 companies (8.3% of salary), based on the FTSE 350 DC Pension Scheme Survey.
  8. The USS Trustee has confirmed that should reforms be blocked, members and employers will face escalating contribution rates starting in April 2022 and rising every six months until 2025 – rapidly reaching unaffordable levels that would undoubtedly lead to mass member opt-outs and employer insolvency.
  9. Employers want to urgently progress longer-term reforms to the scheme to address the scheme’s high opt-out rate, by developing a lower-cost option for staff, progressing a thorough governance review, and exploring alternative scheme designs (including conditional indexation).
  10. The USS Trustee has stated that a 2021 valuation would make no material difference to the required contribution rate and while the deficit would be smaller due to recent market improvements, the cost of future service would in fact be higher. The Pensions Regulator has provided its views on this matter (and note it is the USS Trustee that has the power to decide whether to carry out a valuation).