New USS data ‘unequivocal’ in proving case for reversing pension cuts

• ​New data released by the trustee shows benefits can be restored and still leave the pension scheme in surplus
• Cuts forced through earlier this year will see the average lecturer lose 35% of their future guaranteed retirement income
• University staff in the USS pension are currently being balloted by UCU for strike action over the cuts

Devastating cuts to Universities Superannuation Scheme (USS) pensions affecting hundreds of thousands of university workers can be reversed at the earliest opportunity, the University and College Union (UCU) said today (Thursday 6 October), after new data released by the trustee shows restored benefits would cost less than current contributions and still leave the scheme in surplus.

The data, from USS’s June financial monitoring report, shows how the scheme would be performing with the controversial cuts revoked and pensions restored. The cuts were forced through by university employer body Universities UK (UUK) in April this year.

The monitoring data shows that restoring benefits would leave the scheme with a £0.6bn surplus and that to maintain the restoration, contributions would fall to 27.4%, lower than the current level of 31.4%.

UCU said that the data also shows the extent to which universities are wasting money servicing a deficit that no longer exists. Employers and employees are currently paying 6.2% (around £0.5bn per year) towards the £14.1bn deficit outlined in the March 2020 valuation, and on which the cuts were predicated.

Under the package of USS pension cuts the average lecturer is set to lose 35% of their future guaranteed retirement income. For those at the earliest of their careers, the losses to retirement funds reach hundreds of thousands of pounds.

The release of the USS data comes just days after the University of Cambridge’s own actuary advisors estimated that restored benefits based on the June 2022 funding position, would cost no more than scheme members are currently paying.

In August, economist Professor Emeritus Michael Bromwich estimated that UUK’s cuts could be restored for contributions of 31.8%, leaving a £0.4bn surplus.

In the same month, UCU’s negotiators also wrote to Dame Kate Barker, Chair of the USS Board, calling on the trustee to investigate repeated misleading claims from UUK on the scale of the cuts. Both UCU analysis and data produced by USS’s own pensions modeller showed that the employers’ 12% claim and the 7-15% claim are serious underestimates, while the 10-18% claim is a significant underestimate.

University staff in the USS pension are currently being balloted by UCU for strike action over the cuts. The union is demanding that benefits be restored and that UUK commit to supporting a new evidence-based and moderately prudent valuation of the scheme. If the ballot is successful it will deliver unprecedented strike action at USS universities.

UCU general secretary Jo Grady said: 

‘University staff were clear from the beginning that pension benefits did not need to be cut and that the USS scheme was strong – today they have been vindicated.

‘Not only has the deficit disappeared in six months, but new data is also showing the cuts can be revoked and benefits restored for lower contributions than are currently being paid to deliver cuts. Every vice chancellor who supported the cuts, against all reliable evidence, should hang their heads in shame.

‘There is no credible argument against returning pension benefits to staff and a commitment to that must be forthcoming. If it isn’t, university staff will deliver the biggest wave of strike action UK higher education has ever seen.’