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University responds to UCU ballot plans

27 Sep 2021

A focus on USS pension

You may be aware that last week the University and College Union (UCU) unfortunately announced that it has chosen to ballot its members over industrial action in connection with pensions and pay and conditions.

Over the coming weeks, we will provide you with further information and views on the background to both areas from The University’s perspectives, our concerns for staff and of course, the impact potential industrial action could have, especially on our students’ experience, taking away the opportunity to learn after many difficult months.

The first of this series of planned communications is focused on the issue of pensions and USS. You can be assured that we’ll be coming back to a broader range of topics in the coming weeks, both from a University and wider Faculty perspective.

A focus on pensions – busting some myths

We want our staff to have access to an attractive, affordable and sustainable pension which will provide for their retirement – and we would like to reassure colleagues of this in light of UCU comments and ballot plans over the outcome of the USS pension negotiations.

The USS Trustee has agreed to proceed with the employers’ proposals for concluding the 2020 USS valuation. Failure to do so would have meant very substantial increases in payments for employees (to 11% of your salary) and employers (23.7%) next month and two further increases next year. It is clear that these increases would be imposed if an agreement is not reached now.

The substantial increases timetabled for 1 October 2021, and April 2022, are now off the table – and the 2020 valuation will be concluded with a total combined rate of 31.2%, which is a 0.5% increase over the current rate. This will mean that members’ contributions will rise to 9.8% (from 9.6%) and employers to 21.4% (from 21.1%). 

However, the UCU has decided to ballot its members as it believes staff in the scheme are facing a cut in their final pension of up to 35%. Universities UK and our University do not agree with that conclusion – the evidence for this is set out below.

Also, despite vocal assertions from UCU to the contrary, no alternative proposals were formally submitted to the Joint Negotiating Committee or to UUK who have invited UCU to work with employers to develop lower-cost options for members, consider alternative scheme designs and review the scheme’s governance. We would of course prefer that UCU works with UUK to look after our colleagues’ best interests.

Impact figures

It is important to remember that pensions built up to date are secure and won’t be changed. The pension also retains a significant defined benefit (DB) component, albeit lower than previously.

Following on from that, it is simply not true that staff in the scheme are facing a cut in their final pension of 35%, nor even 23% cuts if the Defined Contribution (DC) pot (USS Investment Builder fund) is taken into account.

Based upon independent modelling prepared for the USS Joint Negotiating Committee (JNC), the impact will be a reduction of between 7% and 15% on future benefits for most members, which we acknowledge is significant. However, this does not paint the full picture.  

If there is not a JNC agreed outcome for the 2020 valuation, USS will impose a new Schedule of Contributions (SoC) based upon the cost of retaining current benefits, as noted above.  This would involve significantly higher contribution rates for employers and members.

Colleagues would ultimately be facing a cut in their take home pay of approximately £1,600 a year for those earning around £40,000.

Those who would be affected by changes will receive an accurate and impartial explanation of the potential impact from the USS Trustee during formal consultation.

We are also aware that the USS Trustee’s indicative assessment of the situation in March 2021 is not materially different to that of 2020, as you can see in question 5 in this link.

In conclusion…

Director of Human Resources, Karen Heaton said: “We urge the UCU to work with UUK on behalf of the many employers in the USS. Workplace pensions are extremely important and there is a risk, through misjudged communications and the use of particular figures and headlines, that individuals might make pension decisions which have a lasting and detrimental effect.

“We know how valuable the pension is to our staff, so it’s important to us that the scheme provides attractive benefits and remains affordable and sustainable for all. We have been working hard to attain that for many months – we very much welcome the UCU playing its part in that process.”

She added: “In addition we are concerned that industrial action would affect our students’ experience, taking away the opportunity to learn after many difficult months.

“It is disappointing that UCU intends to ballot its members on the USS pension when we have all worked hard to achieve the best outcome possible. We are obviously concerned that industrial action will have a further damaging effect after a significantly disrupted 18 months.”

Further updates will be published on StaffNet and through other channels as appropriate.

For further information you can read a glossary of terms or visit: