I was one of about 1,000 academics to sign this letter to the Times Higher Ed on university pensions:
We write as senior academics to express our concern about the proposal from Universities UK to end guaranteed pension payments in the Universities Superannuation Scheme (“UUK reforms ‘will cut USS pensions by up to 40 per cent'”, News, 30 November).
The USS is the main pension scheme for academic and related staff in the pre-92 institutions and, since its foundation, has provided a decent income in retirement for hundreds of thousands of people. In a sector where many would earn more working in the private sector, the USS pension has provided compensation for relatively modest salaries and has acted as a magnet for talented overseas staff.
The UUK proposals mean the replacement of guaranteed pensions with a defined contribution scheme that will be wholly dependent on movements in stocks and shares. First Actuarial estimates that a typical lecturer will receive £208,000 less under the proposals than presently. For universities that rely on the USS to help recruit and retain staff this will be a disaster, with lecturers enjoying retirement income of an estimated £400,000 less than their colleagues in the rival Teachers' Pension Scheme, which mainly enrols staff in post-92 universities.
Young university staff work hard yet have endured years of pay restraint and casual contracts, while watching many at the top enjoy great rewards. Now that the USS — arguably the best aspect of the employment package — is at risk, we want to stand shoulder to shoulder with all our colleagues, and especially the next generation, to defend our profession.
I should make clear I am a member of the USS but my limited service means it will never keep me in old age.
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Is this an opportunity for you to suggest that the USS adopts your People’s Pensions idea?
It can’t
PQE is a government policy
Try reading about it
The USS could decide not to invest in listed shares and instead invest 75% of contributions in bonds and 25% in start-ups which as I understand it is what you have recommended.
They could
I have no say in that
“or universities that rely on the USS to help recruit and retain staff this will be a disaster, with lecturers enjoying retirement income of an estimated £400,000 less than their colleagues in the rival Teachers’ Pension Scheme, which mainly enrols staff in post-92 universities.”
All this demonstrates is the unaffordability of most public sector DB schemes and the imminent need for these to removed and replaced with sustainable DC schemes with appropriate employer contribution market-based rates.
Who pays you Bill?
Why should academics have gold plated DB pensions when the vast majority of people have to contribute to a DC fund?
I’m also pretty sure academics aren’t that badly paid, given the UK FE pay tables. You could probably share how much you are getting paid and I am sure it would be multiples of the median income.
I am paid near enough average professor pay.
And why DB?
Daft question: why not when we know DC has no hope of delivering anything but short term gains to finance and is a con trick waiting to fail?
DB schemes require massive subsidies from taxpayer to the recipients, which can’t be justified. Suggesting that these schemes invest in bonds simply increases that subsidy due to the lower (long term) returns.
A DC schemes scheme allows the member to benefit to benefit from the investment returns on their contributions (and employer’s contributions) in whatever assets they choose. Certainly not a ‘con’.
You mean universities cannot be justified?
Why?
Well, the average UK professor salary is over 75K now, which puts you comfortably in the top 1% of earners.
DC pensions mean the money you are saving is the money you retire on. You are saving for your own retirement.
DB pensions, or final salary schemes, are typically far too generous when compared to what people could save on their actual incomes.
Which is I guess why already well paid academics such as yourself are complaining that this is going to be taken away from them.
I earn a little more than that
As, incidentally, I did before I was a professor
So yes, I know I am very well paid
But there again, why are you so worried that professors should be well paid? What would you wish for?
Another example of short termism and poor planning for the future from Universities UK.
Young talented academics will look elsewhere for better returns on their expertise.
As a result, UK universities risk attracting fewer students, especially the wealthy ones from abroad paying full fees. They’ll demand to have the best and most prestigious academics teaching them.
One of my friends left in the 80s to secure a highly paid job in UCLA where his salary tripled. Yet that was at a time when the perspective of a USS pension was still attractive enough to keep the less adventurous academics here.
Also a time when permanent contracts were the norm. No longer.
If I were a young academic these days, I’d definitely look elsewhere.
Especially if Brexit goes ahead.
Richard, it’s worth adding as a related aside that the strike action the UCU (our union) has balloted those in pre 1992 universities on is the first large scale action that I’m aware of carried out under the new 50% turnout rules. Of course, I was aware this was on it’s way, but I hadn’t appreciated that the rules actually state 50% turnout in each workplace not overall (which is what I’d assumed). So, it may be at my university the turnout is above 50%, in which case if the majority vote in favour we can strike. But at Durham, say, or Nottingham, etc, they don’t hit 50% in which case they can’t take action.
Given this is the Tories idea of democracy maybe we should adopt the same rules for local and general elections? After all, if this is what unions and those of us in unions have to go through in a ‘democracy’ then why not councillors and MPs.
This is not democracy at all, of course
Ir’s like saying that each UK constituency is governed only if it voted for the government
Richard Murphy said “You mean universities cannot be justified?”
I clearly didn’t say that, why would you suggest otherwise?
What is the justification for massive subsidies to university staff? Are you claiming that there is evidence that these people are massively underpaid compared to similar roles elsewhere?
The price worth paying for their services?
Are you saying they should take a pay cut?
Why?
Bill Giles
When the value of these pensions was increasing significantly as longevity increased and interest rates fell, did their contributions increase sufficiently to fund the gap?
Did they take pay cuts to offset the increased value of their benefits?
Turning your question around, why should the general population the pay cuts (increased taxation) to fund the pensions of these University employees?
Did the population pay?
The fund is not guaranteed
Do you know anything you’re talking about Bill?
Where do the employer contributions to the scheme ultimately come from?
Is there a realistic risk that these pensions won’t be paid?
As a pension actuary with over 25 years of experience, I’d suggest I know much more about it than you!
The original article is massively flawed as it fails to acknowledge that the new scheme could actually result in higher benefits to member depending on a range of factors, yet is written as if the benefits from the new scheme are certain when they are not.
Once again, quite why public sector workers should have this certainty, subsidised by the taxpayer is not explained or justified.
Have you heard of fees?
I’d suggest that you’re either a) not an actuary or b) you’re a remarkably ill informed one who c) is not exercising sound professional judgement
What about fees? There are fees on DB schemes too – who is paying for them?
You seem to ask a lot of questions but never answer any. Presumably because you don’t want to show yourself up? You clearly have no formal training in pensions, and it shows!
What professional judgement am I failing to exercise? I understand the msssive cost of DB schemes and the inherent subsidy to those who benefit from them – which bit are you disputing?
Hang on Bill. You can;’t make that leap. I may approve of DB schemes and utterly disapprove of the charges made to them. They are unrelated issues. And precisely because I do not claim expertise in running such schemes I can question the costs people like you (or so you suggest) impose on them.
But you cannot say that is reason to get rid of DB schemes. That is reason to reform their costs.
And again, your judgement appears lacking: you cannot see the difference in these arguments, apparently.