Tiered contributions under consideration with USS row at deadlock

The sector-wide benefits of UK higher education’s biggest pension fund may be under threat as university staff and employers dig in to increasingly entrenched positions in their dispute.

As staff at 60 UK universities began eight consecutive days of strike action this week, after institutions and the University College Union failed to reach a compromise over pay and pensions, Universities UK suggested that it could consider advocating a move to tiered pension contributions – an approach that was previously proposed in 2018.

Stuart McClean, head of pensions at UUK, said that the Universities Superannuation Scheme must be a “sustainable scheme for the future” and perhaps “conversations about a one-size-fits-all approach” to contributions needed to happen.

“Some members are willing to pay more to keep their current benefits, but some – because of their financial situation – are not. They may want to contribute less and get less benefit,” he said.

The joint expert panel, set up by UUK and the UCU to examine the USS fund, is understood to be exploring the idea of tiered contributions for its second report, which is due to be published soon.

USS members now contribute 9.6 per cent of their salaries to their pensions, up from 8 per cent in April. Employers are contributing 21.1 per cent, up from 18 per cent. But unions argue that the first report of the joint expert panel demonstrated that benefits could be protected without an increase in contributions, and are adamant that any increase in payments should be covered by employers alone.

Last week, UUK suggested that employers could choose to “make an additional payment at a local level” if they wanted to keep employee contribution levels down.

On tiered contributions, a UUK spokeswoman added that “the belief of USS employers is that some scheme members may want that kind of flexibility in the scheme” but “the UCU have been clear they do not want to explore this option”.

“If their position on that changed and they wanted to put it back on the table for discussion we would be very happy to work through that as an option,” she said.

A UCU spokesman said that “any proposals about tiered contributions would need to be based on the recognition that USS can be funded with a much lower overall contribution rate than it is currently, as the first JEP report concluded. Now is not the time for employers to deflect from that fact.”

While staff pension contributions are already tied to salaries, academics fear that moving to a tiered system based on what staff or universities can afford would exacerbate inequality in the sector and undermine the principles of the USS.  

Mike Finn, former president of the UCU’s University of Exeter branch, said that a two-tier scheme would “penalise casualised staff”, claiming that the suggestion is “an attempt to divide HE workers further”.

“Any attempt to introduce differing benefits at different institutions will fracture a profession founded on cooperation and collaboration still further. It will pit institutions against each other on yet another level – when what we should be doing is working together as a sector,” said Dr Finn, senior lecturer in history at Exeter.

Sean Wallis, president of the UCU’s UCL branch, added that it was “a terrible idea, which would compound inequality in working lives, and create new levels of pensioner poverty”.

The question of where a compromise might emerge has become increasingly pressing as both sides refuse to budge from their positions on contributions under the current funding system.

A snapshot Times Higher Education survey of vice-chancellors found that most were united behind UUK’s position that a further increase in contributions – or an additional pay rise, another key factor in the dispute – could not be afforded.

A few respondents said that they would be prepared to revive UUK’s offer of a time-limited cap on employee contributions of 9.1 per cent, funded by increasing employer payments to 21.6 per cent.

But this was rejected by the UCU because it came with a two-year moratorium on strike ballots attached – later downgraded to the cancellation of the latest ballot. And Jo Grady, the union’s general secretary, said that it was not back on the table.

“The reason we’ve ended up back in this ballot period is employers tried having that exact conversation: would 9.1 per cent work?” she said.

“They are missing the conversation we are having here, which is that the JEP demonstrated that nobody needs to pay more. The fact they want to have the conversation ignores the reality that the scheme is sound. The scheme does not need to increase contributions; certainly nobody needs to have their pension benefit downgraded.”

Dr Grady added that if universities refuse to take the union’s demands seriously and come back with a sustainable offer there may be “a second wave” of strike action, including at universities that did not hit the turnout threshold required for walkouts the first time around.

Roger Seifert, professor of industrial relations at the University of Wolverhampton, said that he expected the impact of the strike to be “significant despite the general election”.

“The employers, as before, seem to be unprepared, divided, and largely incompetent. I would expect a big hit early on and growing anger with the vice-chancellors and employers as they seem incapable of negotiating in good faith,” he said.

ellie.bothwell@timeshighereducation.com