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University staff £240,000 worse off in retirement (3 Sep 2019)

University staff balloting for pension strikes £240,000 worse off as costs rise and benefits cut

3 September 2019

University staff balloting for pension strikes £240,000 worse off as costs rise and benefits cut

University staff being balloted for strike action are paying far more for their pension, but will lose tens of thousands of pounds in retirement because of a series of detrimental changes made to the Universities Superannuation Scheme (USS) since 2011, according to new analysis.

According to modelling by First Actuarial, because of the changes to USS, a typical member will pay around £40,000 more in to their pension, but receive almost £200,000 less in retirement leaving them £240,000 worse off in total. That is compared to a hypothetical member who also joined in 2011 on the same conditions, but has not been affected by any of the changes brought in since then.

UCU is balloting over 52,000 USS members in 69 UK universities* for strike action. That ballot opens on Monday 9 September. It will run at the same time a ballot over pay, equality, job security and workloads at 147 UK universities. Both ballots close on Wednesday 30 October.

The analysis looks at how recent changes to the scheme – including increasing contribution levels from 6.35% of salary in 2011 to 9.6% from next month, the closure of the final salary element and a restriction on defined benefits – have affected members’ costs and retirement package.

UCU said that, while the analysis shows that those that earn more will lose more, the impact of increased costs on those on lower wages must not be discounted and warned some members may leave the scheme.

The union said USS members have been frustrated by a lack of progress in the dispute that saw universities brought to standstill last year by unprecedented levels of strike action, staving off plans to abolish the defined benefit element of USS.

Last month universities pushed through plans to make members pay 9.6% of their salary into their USS pension, compared to 8.8% at present. The union previously wrote to universities in June and warned that if they did not agree to limit members’ contributions to 8%, or meet the cost of any additional contributions, then they faced the risk of a strike action ballot.

UCU general secretary Jo Grady said: ‘This analysis details the substantial losses suffered by USS members in recent years. A typical USS member will be around £240,000 worse off because of the changes made to the scheme since 2011. It is no wonder they have had enough and ballots for strike action open on Monday.

‘The latest round of increased contributions backed by universities represents another pay cut for staff. We are concerned that those on lower pay may well decide they simply cannot afford to pay for a pension any more, putting the future of the scheme at risk.

‘Universities have to recognise the anger and frustration that members feel about the recent changes, how the scheme has been valued and how it has been run. It is not good enough to come back time and again with proposals that force members to pay more for reduced benefits.’

Total loss to members under changes to USS (benefit cuts and contribution increases)

Staff profile Total lost in benefits Extra paid in contributions Loss total
Starts on spine point 37 earning £40,792 and moves up to £48,677 £134,000 £39,300 £173,300
Starts on spine point 37 earning £40,792 and moves up to £59,828 £198,300 £40,900 £239,200
Starts on spine point 37 earning £40,792 and moves up to £110,217 £689,100 £45,300 £734,400
Works 20 hours a week. Earns £11.40 an hour for first three years, £14.90 thereafter £41,800 £16,200 £58,000
Works 30 hours a week. Earns £11.40 an hour for first three years, £14.90 thereafter £60,100 £24,200 £84,300

Assumes all work 30 years paying into USS. Retirement of 27 years. Salary growth of CPI+2%

 

* University of Aberdeen

Aberystwyth University

Aston University

Bangor University

University of Bath

Queen’s University of Belfast

Birkbeck, University of London

University of Birmingham

University of Bradford

University of Bristol

Brunel University, London

University of Cambridge

Cardiff University

City, University of London

Courtauld Institute of Art

Cranfield University

University of Dundee

University of Durham

University of East Anglia

University of Edinburgh

University of Essex

University of Exeter

University of Glasgow

Goldsmiths University, London

Heriot-Watt University

University of Hull

Imperial College

Institute of Development Studies

University of Keele

University of Kent

King’s College London

University of Lancaster

University of Leeds

University of Leicester

Liverpool School of Tropical Medicine

University of Liverpool

London School of Hygiene and Tropical Medicine

London School of Economics and Political Science

Loughborough University

University of Manchester

Newcastle University

University of Nottingham

Open University

University of Oxford

Queen Mary University of London

University of Reading

Royal Holloway, University of London

Royal Veterinary College

Ruskin College

School of Oriental and African Studies (SOAS)

University of Salford

Scottish Association for Marine Science

University of London (Institutes and activities)

University of Sheffield

University of Southampton

University of St Andrews

St George’s University of London

University of Stirling

University of Strathclyde

University of Surrey

University of Sussex

Swansea University

University of Wales Trinity St David’s

University of Ulster

University of Suffolk

The School of Pharmacy and IOE, University College London

University of Wales

University of Warwick

University of York

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