Universities UK has agreed to reverse cuts made to the sector’s Universities Superannuation Scheme (USS) – the largest private pension scheme in the country.
In a joint statement, Universities UK and the University and College Union (UCU) agreed to full benefit restoration to pre-April 2022 levels by April 2024, worth around £16bn, subject to the deal being agreed by both organisations’ members.
The industry body, which represents 142 higher education institutions, will also make an additional one-off pension payment of around £900m to help make good the money members have lost since April 2022. The agreement paves the way for new contribution rates to the defined benefit scheme to be introduced as soon as January.
While UCU members continue to take industrial action at some universities and the UCU leadership is looking to extend its strike mandate, this dispute relates to pay and job security; the two sides reached agreement on pensions earlier this year when UCU members voted by 85% in favour.
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The Universities Superannuation Scheme is used by 331 institutions, managing assets of £76bn for around 528,000 members.
The scheme trustee has estimated total contribution rates need to be 20.6% for benefits to be restored. This will likely bring employee contribution rates down from 9.8% to 6.1% with a decision by the USS trustee board expected in November. The trustee has shown it is sustainable to keep the new contribution rates and improved benefits for at least two valuation cycles (six years).
Universities UK and UCU also committed to continue to work together to ensure the stability of benefits and contributions at future valuations. This will be done through a working group comprising UCU, Universities UK and the scheme’s trustee.
The UCU’s higher education committee will vote on whether to ratify the agreement, which is then subject to an ongoing consultation of scheme members and proposals that will be submitted to the Universities Superannuation Scheme joint negotiating committee at the end of this month.
On behalf of USS employers, Vivienne Stern, chief executive of Universities UK, said: “We are delighted to have been able to agree on an outcome for the 2023 USS valuation which will be good for all members of the UK’s largest private pension scheme, and which will bring down costs for both members and employers. This has been possible largely as a result of dramatic changes in economic conditions since the last valuation, including high-interest rates, combined with the commitment from employers for additional financial backing – or covenant support.
Today is a historic victory for UCU members. It should also be motivation for every single worker in the UK who has seen their pension slashed“ – Jo Grady, UCU
“When the scheme was in deficit in the past, we took steps to stabilise it. Now that it is in better shape, we are pleased that we can agree to pass on the benefits of the improved position through lower contributions and improved benefits. It is vitally important that we stabilise the scheme to avoid future fluctuations in its fortunes. The projected surplus in the scheme is an important protection, but we need to continue to work, with renewed momentum, towards arrangements which will provide longer-term stability.”
UCU general secretary Jo Grady said: “Four years ago our members were told that winning back their pension was an impossible task. When standing for election, I made it clear that it was only by the whole union pulling together and never giving up that we would win this dispute. Many doubted us.
“Sixty-nine days of strike action, years of campaigning, protesting and lobbying have brought us to this moment. Today is a historic victory for UCU members. It should also be motivation for every single worker in the UK who has seen their pension slashed. Our members can be rightly proud.
“This is just the start for our union. We have pension justice. We now move on to delivering justice on pay and job security. We will not stop until we create a higher education sector that properly values its staff.”
UCU members have taken a total of 69 days of strike action in defence of their pensions since 2018, when closing the defined benefit element of the scheme was mooted.
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