Archive for USS

USS Pension Proposal: Poll

Posted in Education, Politics with tags , , , , , on March 13, 2018 by telescoper

Last night I saw the news on Twitter that negotiators on behalf of the Universities and Colleges Union (UCU) and the employers’ organisation Universities UK (UUK) under the auspices of the Advisory Conciliation and Arbitration Service (ACAS) agreed a proposal to end the strike over pensions that has been going on since the end of February.

The text of the agreement can be found here (PDF). This proposal will have to be discussed and ratified formally, but the negotiators hope this can be do today and that the strike will be suspended from tomorrow.

The proposal suggests a transitional period of three years from April 2019 during which a much reduced Defined Benefit scheme will operate, but it still affirms the much disputed November 2017 valuation of the scheme which means that it is overwhelmingly likely that after three years the dispute will be back on.

I shall be leaving the USS scheme in July 2018 as I’m moving full-time to Ireland where I will be joining a Defined Benefit scheme so the changes outlined in the document will not affect me. Moreover, though I have supported the strike I am not a member of UCU. If I were I would not be in favour of accepting this deal because it seems to me that it amounts to an abject surrender on all the main issues. But given my personal situation I don’t think my opinion should carry much weight. The few friends I have discussed this with feel the same as I do, but I’m interested to know what the general opinion is. If you feel like filling in the poll below please feel free to do so. I’ve divided the responses between UCU members and non-UCU members to see if there’s a difference.

On one matter however I am less equivocal. The document calls on staff to `prioritise the rescheduling of teaching’ (lost during the strike). I have a one-word response to that: NO. Not only will it be logistically impossible to reschedule so many teaching sessions, but I am also not going to do extra teaching for free when my pay is being deducted for days on strike.

As usual, I invite your comments through the box below.

UPDATE: Here is a Google Document showing how UCU branches are responding to the proposal: at the time of posting, it is solidly `reject’..

UPDATE: Following on from the above, the UCU has now formally rejected the proposal. The strikes continue.

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University Pension Differences

Posted in Education, Finance, Maynooth with tags , , , , , , , , on January 26, 2018 by telescoper

Following a ballot of members of the University and College Union (UCU), the UK university sector is gearing up for strike action over proposed changes to the USS pension scheme. Unless the dispute is resolved in the meantime (which I think is highly unlikely) the first strike lasting two days will place on 22nd and 23rd February. Thereafter strikes will escalate to cover three days, four days and five days in subsequent weeks.  I’ll actually be in Maynooth for the first 48 hour block so won’t have to worry about crossing a picket line initially, but will have to later if it drags on. It looks set to be a bitter dispute which will not be easily resolved.

When I joined USS (in 1988) it was a simple `Final Salary Scheme’. Both employer and employee contributed and the benefits accrued were an index-linked pension of 1/80 of the final salary for each year of contributions and a (tax-free) lump sum of 3/80 for each year of contributions. I joined at age 25 so I expected to accrue 40 years of pension if I retired at 65, namely a pension of half my final year’s salary and a lump sum of three-halves. It looked a good deal and was a significant factor mitigating the relatively low starting salary for academics in those days.

Over the years it became apparent that this scheme is actuarially unsound because (a) people are living longer, increasing the scheme’s liability and (b) investment growth achieved by the USS fund managers has decreased, with a negative impact on asset growth. Moreover, the USS fund is not underwritten by the government, so if it collapses completely members could be left with no benefits at all.

The USS Final Salary scheme was closed to new entrants some years ago and replaced by a less generous defined benefit scheme. A couple of years ago it was closed to existing members too, though the benefits accrued are retained; I will now only be able to get 28/80 of my final salary from that scheme when I actually retire. The scheme was replaced by a hybrid of an even less generous defined benefit scheme and a defined contribution scheme (where the pension benefit is dependent on the fund valuation at retirement, as most private pensions). Now the proposal is to remove the defined benefit component entirely. The loss of pension benefits will be substantial.

I don’t see any easy settlement of this dispute so I’m glad that it won’t affect me very much. I’ll be leaving the UK Higher Education system this summer and relocating to Ireland. Quite a few people have asked me how the pension scheme works here so I thought I’d point out the differences.

The first thing to say is as a professor in the National University of Ireland at Maynooth I am treated as a public servant so my future pension benefits here are covered by the Single Public Service Pension scheme. This resembles the final salary scheme that USS used to be, but with the important difference is that it is integrated with the State Pension to which everyone is entitled if they pay social insurance contributions. This – called the SPC – is similar to the old State Earnings-Related Pension Scheme (SERPS). Since public employees benefit from this as well as the public service pension scheme, the accrual rate in the latter is lower than the old USS scheme – just 0.58% per year – on salaries up to €45,000. For salaries above this figure the amount above the  limit generates an accrual rate 0f 1/80, just as the USS version. There is also a lump sum which accrues at 3.75% per annum, the same as the USS scheme.

In summary, then, the big difference is that in Ireland the public service pension is integrated with the state pension, whereas in the UK the latter is entirely separate. It’s also the case that in Ireland the pension is guaranteed by the government (which, of course, can change the rules…)

In my opinion the pension scheme for University staff in Ireland is significantly better value than the diminishing returns provided by the USS scheme, yet another reason why I made the decision to move here.