Pensions  

Universities criticised over 'disgraceful' pension proposals

Universities criticised over 'disgraceful' pension proposals

A union has criticised pension changes at two UK universities which it claims will see some staff facing a 20 per cent cut to their pensions.

More than 4,000 members of staff at the University of Manchester face a 20 per cent cut to their pensions, according to Unison, and those who are enrolled in the current scheme will have their pensions calculated on a career-average basis, rather than having it based on their final salary.

Staff joining Manchester University’s pension scheme after the changes come into force will have their pensions calculated by defined contribution.

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Staff joining the pension scheme after the changes come into force will have their pensions calculated by defined contribution (DC), so what they get out will be determined by how the scheme’s investments have performed.  

Meanwhile 576 members of staff at Staffordshire University will see their pensions moved from the Local Government Pension Scheme, which promises them a specific income in retirement, to a DC scheme run by the university itself.

Following Staffordshire University's decision to make changes to the pension schemes, Unison members will hold a strike on "selected dates". 

Christina McAnea, Unison's assistant general secretary, said: "This is a disgraceful move by both universities, undermining the pensions of the lowest paid.

"It is deeply concerning that two leading universities are offering their support staff inferior pension plans. We must not let this become the norm.

"These new pension schemes will leave staff struggling to plan for retirement and significantly worse off in their old age."

The changes at the two universities comes after the University of Southampton proposed closing its low-paid staff defined benefit (DB) pension scheme, which unions warned would leave a typical employee in mid-career with a pension two-thirds lower.

Last year it was proposed the Universities Superannuation Scheme (USS) should be shut down and go from having both a DB and a DC section, to becoming a full DC fund.

The proposals were seen as a way of solving the scheme’s £12.6bn deficit but analysis by First Actuarial found that university staff could be £200,000 worse off after the changes.

Earlier this year, the leader of the Liberal Democrats Sir Vince Cable wrote to universities minister Sam Gyimah saying the government should intervene in the university staff pension dispute.

Sir Vince said the government should underwrite the USS to relieve concerns, eliminate the risk of the scheme and guarantee academic staff with the safety of their pensions.

A statement from Staffordshire University said: "The new defined contribution scheme is a good quality pension scheme and for the first time we are able to provide these staff with a non-contributory pension, with the University contributing 7 per cent as the basic entry level pension.

"In addition, the university will contribute up to a further 3 per cent dependent on how much the individual wishes to save for their own pension. The quality of this pension offer is recognised by the Pension Quality Plus mark, a national standard of excellence in pension provision."