Essex v-c says universities can afford to pay more into pensions

A vice-chancellor has broken ranks to argue that UK universities can afford to contribute more to staff pensions, ahead of an eight-day strike over the issue.

Anthony Forster, vice-chancellor of the University of Essex, criticised Universities UK negotiators for being “not willing to embrace principled compromise in seeking a solution to our pensions crisis”. “Continued failure” to reach a deal on the future of the Universities Superannuation Scheme “will not only affect the sustainability of our universities, but negatively impact on our ability to recruit and retain global academic and professional services talent in our universities”, he said.

Concern about the projected deficit at the pension scheme – UK higher education’s biggest – have led to employee contributions being hiked to 9.6 per cent of salary, up from 8 per cent in April. Employer contributions have increased from 18 per cent to 21.1 per cent.

But, in a blog for staff and students, Professor Forster says that he felt the trustees of the pension scheme were “being overly prudent in their assumptions, which undervalue assets and overestimate liabilities”.

Professor Forster says that Essex “remain[s] willing to increase employer contributions to the scheme, to sustain critical features of the USS, including defined benefits”.

University and College Union members at 60 universities are set to walk out from 25 November to 4 December in disputes over the UCU and this year’s pay offer from the Universities and Colleges Employers’ Association.

Professor Forster writes: “In 2018 we had a painful and disruptive strike that dragged the parties to the negotiating table. It is a matter of enormous pain and regret that we again find ourselves in a position that the negotiators who represent us – both employers and employees – are not willing to embrace principled compromise in seeking a solution to our pensions crisis.

“Should positions remain unchanged, no side will win and the most likely outcome is that a solution will be forced on us by the Pensions Regulator, who has the legal authority to break the pensions deadlock and impose a solution. I have no doubt this will be a profoundly unsatisfactory outcome for those that share our view about USS.”

Professor Forster writes that employees should pay a share of increased contributions to protect USS benefits, but that Essex was “concerned about the extra level of employee contributions and the impact this is having on affordability for some staff, especially if they feel forced to leave the USS scheme”.

He says that the joint expert panel of UCU and UUK-nominated specialists should “accelerate its work and…stake out where the common ground might be for the future”, producing a report “prior to the commencement of strike action”.

“This might include, for example, differential contribution levels, so that USS members on lower salaries contribute a lower percentage of their pay to the scheme in a manner similar to the Teachers’ Pension Scheme, or smoothing contribution increases over a longer period to ensure that the funding of the scheme reflects the long-term nature of the assets and liabilities of a pension scheme,” Professor Forster writes.

He adds that union and university representatives should “return immediately to the negotiating table without preconditions on either side”.

Professor Forster also says that Essex will make a “mitigating payment” to students who have lectures and classes cancelled as a result of the strike.

A spokeswoman for USS employers said that their position “has been formed following extensive engagement and consultation with the 340 employers in USS”.

“The vast majority of employers believe the current arrangement where employers meet 65 per cent of costs and members 35 per cent is fair and reasonable. A higher cost national settlement is not affordable for most employers,” she said.

“If any employer takes a different view then they can choose to make an additional payment at a local level to offset higher pensions contributions for their staff.”

chris.havergal@timeshighereducation.com