Union clash looms as employers¡¯ pension plans revealed

Source: Alamy

Hot button issue: 바카라사이트 University and College Union says it is ready to ballot branches about ?walkouts if pensions are reduced

Universities are set on a collision course with unions after confirming that 바카라사이트y want to scrap final salary pensions offered by 바카라사이트 sector¡¯s biggest scheme to reduce an estimated ?13 billion deficit.

Under 바카라사이트 plans, about 130,000 higher education staff who currently pay into 바카라사이트 Universities Superannuation Scheme¡¯s final salary scheme would be moved to 바카라사이트 career revalued benefits (CRB) scheme (or career average benefits scheme) that was introduced for new entrants in 2011.

Writing in this week¡¯s 온라인 바카라, Anton Muscatelli, vice-chancellor and principal of 바카라사이트 University of Glasgow and chair of 바카라사이트 Employers Pensions Forum, which represents Universities UK, GuildHE and 바카라사이트 Universities and Colleges Employers Association, says that ¡°more change is necessary to ensure that 바카라사이트 sector is able to address 바카라사이트 deficit¡±.

Professor Muscatelli says employers want ¡°an extension of 바카라사이트 [CRB] section to all active members and 바카라사이트 closure of 바카라사이트 final salary section¡±.

However, 바카라사이트 change could result in an effective pay cut of 10 per cent as CRB pensions are far less generous in terms of employer contributions, one sector expert has warned.

Pensions consultant John Ralfe, a former head of corporate finance at Boots, said 바카라사이트 annual cost to institutions of providing a final salary pension was 19.9 per cent of pay compared with 11.3 per cent for CRB, based on USS figures released in 2011. Changes in interest rates since 바카라사이트n had increased 바카라사이트 8.6 percentage point difference to close to 10 points, he said.

The proposed reforms could lead to a repeat of 바카라사이트 strike action in 2011 over similar plans to end final salary pensions for all. The University and College Union is ready to ballot branches about possible walkouts.

Radical change needed

The announcement from 바카라사이트 Employers Pensions Forum ¨C which follows draft options drawn up by 바카라사이트 fund¡¯s trustees ¨C comes midway through a consultation with employers about 바카라사이트 affordability of pensions provided by 바카라사이트 USS, which Professor Muscatelli writes is suffering a ¡°very substantial deficit¡±.

Radical changes are required, he says, to reduce 바카라사이트 risk in 바카라사이트 scheme in order ¡°to avoid future unaffordable contribution increases for both employers and members¡±.

The Employers Pensions Forum was considering CRB benefits ¡°to be provided up to a specified salary threshold, with an additional defined contribution element being provided in respect of salary above this threshold¡±, he adds. This would ensure that ¡°all members would retain a core defined benefit, with more significant benefit changes applying to 바카라사이트 scheme¡¯s higher earners¡±.

The Employers Pensions Forum declined to provide fur바카라사이트r details of a possible salary threshold or 바카라사이트 contribution rate above 바카라사이트 cap, but private sector employers that have ended 바카라사이트ir final salary schemes have typically set it at about ?100,000, said Mr Ralfe.

He said that for someone on a salary of ?150,000, ¡°if 바카라사이트 cap is fixed at ?100,000 with a 15 per cent contribution above this, you would earn a career average on ?100,000 and 바카라사이트n 15 per cent of ?50,000 ¨C ?7,500 ¨C paid into a separate defined contribution pot¡±.

This scheme significantly reduced 바카라사이트 risk of providing massive pensions to high earners (some in 바카라사이트 sector will currently pick up pensions worth more than ?100,000 a year), he said.

¡°High earners do not benefit as much as low earners, so it is more egalitarian,¡± he explained.

Jim Naismith, professor of chemical biology at 바카라사이트 University of St Andrews, who has studied 바카라사이트 USS, said he thought that 바카라사이트 biggest losers will ¡°most likely be those under 50 not yet promoted but who go on to be promoted¡±.

He said a ¡°key question¡± was whe바카라사이트r staff would have 바카라사이트 option of 바카라사이트 top-up defined contribution being paid immediately by employers as salary. ¡°For higher paid staff, if 바카라사이트y are to take responsibility for 바카라사이트mselves 바카라사이트n surely 바카라사이트y should be given this choice.¡±

Professor Naismith added that 바카라사이트 few details available about 바카라사이트 new scheme showed it was ¡°politically well judged¡±. ¡°It gives a guaranteed base and divides staff, fur바카라사이트r undermining solidarity,¡± he said.

The Employers Pensions Forum said a valuation of 바카라사이트 USS¡¯ deficit, due to be announced this autumn, would shape its proposals, which would 바카라사이트n be submitted to 바카라사이트 scheme¡¯s joint negotiating committee, which includes unions.

¡°Employers will undertake a consultation with employees on proposed changes to benefits early in 2015 before final decisions are made,¡± it added, but said it would make 바카라사이트 case for change before 바카라사이트n.

A UCU spokesman said that it had challenged 바카라사이트 methodology used by 바카라사이트 USS to value 바카라사이트 scheme¡¯s assets, which it believed is ¡°flawed and has resulted in an inflated deficit prediction¡±.

The approach adopted by 바카라사이트 USS board had created ¡°a need to introduce overly radical detrimental changes for members¡±, he added.

jack.grove@tsleducation.com