University lecturers’ pensions: Let’s look at the facts.
The USS proposal is to move future pensions from a Defined Benefit basis (where the pension is linked to final salary) to a Defined Contribution basis (where the fund is subject to investment risks until the pension is taken). Accrued benefits in the past will not be affected (it would be illegal to alter these).
With the increase in life expectancy, Defined Benefit pension schemes (where the pension is linked to final salary) have become increasingly unaffordable. The number of active members in DB schemes has fallen sharply. In 2006 there were 3.6m active members of DB schemes. By 2017 this had fallen to 1.3m. (Data from PPF ‘Purple Book’; an ‘active member’ is a member of an occupational pension scheme who is at present accruing benefits under that scheme in respect of current service). The USS is the biggest pension fund in the UK with assets of over £60 billion.
The move from DB to DC has often been used by employers as an opportunity to cut their contribution to pensions. But USS is not proposing this. The contribution will remain at a (relatively high) 18%, with 13.25% going into the employee’s pension fund.
In other words, university lecturers are only going through the pensions transfer process which most professions have seen, moreover with unchanged employers’ contributions.
Who is behind the lecturers’ strike?
Matt Waddup, who is the campaign chief behind the walkout of 42,000 staff at 64 universities, began his career at the hard-left Rail, Maritime and Transport union. ‘Footage shows that he has been planning strikes over lecturers’ pension benefits for seven years, telling academics that industrial action should escalate gradually until “real damage is done”.’
‘His campaigns deputy at the University and College Union (UCU) is Ed Bailey, an anti-badger cull activist linked to pro-Soviet groups online, including one that pledges to “establish a post-capitalist, communist society”.’ He once posted a photograph from a demonstration in 2009 showing a sign denouncing “Israeli terrorists”.
The UCU is claiming that “a lecturer starting work today could be £208,000 worse off over the course of their retirement – £9,600 a year – under the new proposals for the Universities Superannuation Scheme (USS).” However this assumes that the lecturer (a Professor in this case, member M10 in the First Actuarial example) has unbroken service of 30 years. Most employees – academics included – work for more than one employer during their careers. If this is the case, the sum of their DB pensions can be much reduced, since they may have only a few years of service in DB scheme and their leaving salary is well below their final salary at retirement. DC pensions by contrast are unaffected by moving jobs.