Northumbria University vice-chancellor Andy Long’s recent piece in ߣߣƵ calls for a “big debate” on the sustainability of the Teachers’ Pension Scheme.
Long notes that some post-92 universities have responded to the mounting cost of contributions to the TPS – at a time when the sector is under huge financial pressure – by employing new staff via subsidiaries. This allows them to swerve their legal obligation to enrol academic staff in the TPS and, instead, to offer new staff only a vastly inferior defined-contribution (DC) pension.
By contrast, Northumbria has “chosen a path that prioritises access to a scheme [USS] with defined benefits and that offers colleagues a choice, rather than mandating change”.
However, warm words about choice overlooks the fact that colleagues are being strongly encouraged to make the switch to USS with the threat of smaller annual salary rises (determined locally, outside the national collective bargaining process) for those who don’t. As Long puts it, “we are aiming for USS to become the normalised pension scheme for our academic staff”. When a university sets out specific goals for the future, it makes it less of a debate and a choice for those who work there if they are up against an institutional aim.
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Making that pension switch to USS is not without risk for academics and their families. That is why so many are unhappy. While not every Northumbria academic is a member of the University and College Union, those who are have made their views clear. In large meetings and ballots, they have rejected the pension proposals, passed a no-confidence motion in the executive and voted by a huge margin for industrial action.
I have yet to meet one academic who is truly pleased at being asked to either take a leap of faith into the unknown or stay put in the certain knowledge that their pay will suffer in comparison with that of others.
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Yes, USS is an established private pension scheme, the standard across pre-92 universities. But you give up certain rights when you leave one pension scheme and join another. For instance, if you end up taking early retirement on health grounds, the pension you get by default would only be based on your USS contributions. You would have to apply separately for ill-health retirement from the TPS – and, generally, the TPS would only grant it, for “deferred members”, if you are not “capable of undertaking any form of employment, not just teaching”.
Hence, those with a chronic illness, or concerns about having one, may have no real choice but to stick with the TPS. A significant number of members have told us that the very financial advisers paid for by the university have confirmed to them that they would be better off sticking to the TPS, despite the detriment to their salaries.
Of course, you may not need to take ill-health retirement. But a pension is partly about planning for an uncertain future, and switching schemes increases that uncertainty. The response of the university has generally been that this scenario won’t affect many people, but once you start messing with people’s futures, they start to ask questions about the possible downsides. There is precious little protection or mitigation for these people.
No progressive institution should be forcing staff to choose between their immediate pay needs and their long-term pension needs. That choice is not easy to calculate as there are a lot of factors to take into consideration and nobody knows what the future holds for them. Yes, the DC pension schemes that are now common in other sectors require employees to decide how much of their salaries to put in, but universities should be setting an example, not mimicking the lowest common denominator.
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So, when the vice-chancellor talks about giving academic staff a “choice”, that choice is not as straightforward as is sometimes expressed. USS is certainly cheaper for the employer and (marginally) for the employee, but that could change at any time, as it has done over the past few years. In any case, if USS was as attractive as the TPS, there would be no need for Northumbria to offer any sort of carrot or stick to convince colleagues to make the switch.
I do not pretend that the current financial situation in higher education is anything but difficult. But I give the Northumbria executive no credit whatsoever for adopting a novel approach to the problem. While it avoids subsidiarisation, it passes on employer costs directly to the employee, and members quite rightly worry about how unpredictable their pay will be in the future and whether pension costs will just be the start of the cost transfers. There is nothing good about that.
Northumbria’s stance has implications across the sector. None of the other three post-92s in the northern region have so far felt the need to move away from the TPS. Yet if they see this being done by Northumbria – which is arguably in a better financial position than they are – how many more might try to follow suit?
Perhaps few will be able to do this if USS doesn’t let them in. But the example of Northumbria – one of the “best” post-92s, which has recently won several awards and many plaudits – looking to circumvent a statutory obligation will surely be followed in other ways. Long says the sector needs a debate about the affordability of the TPS, but he has already tipped the scales.
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I understand that Northumbria’s executive have a responsibility to steer their ship in the way they see fit. But the UCU provided them with an alternative way of making savings which involved a far more collegiate approach. They rejected it out of hand.
I have always been proud to be a Northumbria alumnus. But the university’s current plans risk throwing that good reputation away. It is a shame that the executive seem not to have factored that into their calculations.
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Jon Bryan is a regional support official at the University and College Union.
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