University staff will be £240k worse off due to pension changes
According to analysis for the University and College Union (UCU), university staff will be more than £200,000 worse off under new pension arrangements due to rising contributions and reduced benefits. The new research has revealed that, as a result of changes introduced in 2011, a member of the Universities Superannuation Scheme (USS) would pay £40,000 more into their pension but receive almost £200,000 less in retirement. “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,” Jo Grady, UCU general secretary, said.
IZA World of Labor author Marek Góra believes that pension reform can improve social equity by balancing the interests of workers and retirees. According to him, more transparent institutions can lead to more rational decisions on savings, work, and family. In his article, he notes: “Governments need to make pension systems more transparent and make adjustments to reduce the burden on workers, returning the pension system to its social role […]. Transparency and fairness are the key preconditions when adjusting pension systems for the 21st century.”
“If pension systems are not adjusted to population developments, huge social and economic problems will arise, including increasing intergenerational conflict,” Góra adds. According to Universities UK (UUK), the cost of providing defined benefit pensions has risen since 2011 due to the fact that people are living longer and the economic environment has fundamentally changed. The UCU has said that increased pension contributions to 8.8% since April represent another pay cut for staff. Furthermore, another increase is due in October to 9.6%.
“Compared with 2011, employers are now paying more than £400m extra per annum into USS – having increased their contributions from 16% to 21.1% of salary from October 2019. This is far more than most other private pension schemes,” a UUK spokesperson said.
Read Marek Góra’s article Redesigning pension systems.