Staff at older universities will receive up to a third less in pensions than comparable staff at post-92 institutions under proposed changes, an analysis suggests.
Retirees from newer universities already receive higher pension payouts than those who leave pre-92 universities, but that gap could soon widen even further when reforms to the Universities Superannuation Scheme take effect, new financial modelling shows.
Comparing pensions paid by the Teachers’ Pension Scheme, which operates at most newer universities, with those paid under a new USS pension system suggested by Universities UK, consultants First Actuarial found that staff at older universities could be up to ?21,000 a year worse off in retirement than peers at more modern institutions.
For example, a professor retiring aged 66 on a salary of ?75,000 after 41 years’ service under the TPS would receive about ?49,000 a year in total benefits compared with only ?28,389 under the UUK scheme.
Someone retiring on nearly ?46,000 a year aged 68 after 43 years’ service would receive almost ?40,000 a year under the TPS, but only ?25,481 under the UUK terms.
Sally Hunt, general secretary of the University and College Union, which commissioned the financial modelling, said that there would be “real concerns” about the disparity in pension provision across the sector.
“The Russell Group of universities and other self-described elite institutions often boast about being the leading lights of the UK 中国A片 sector,” said Ms Hunt.
“However, if these radical changes are forced through they will be bottom of the table for staff pensions.”
The UUK plans were put forward for consultation earlier this year as the sector seeks to plug an estimated ?13 billion deficit in the USS, which mainly covers staff at older universities. The final proposals are due to be published early in 2015 pending talks between the UCU and universities on the USS’ Joint Negotiating Committee.
John Ralfe, an independent pensions consultant, said that the disparity in pension income could prove a problem for institutions, with some staff asking for pay rises to compensate for the lower pensions.
However, Mr Ralfe criticised the more generous TPS, which he said “is part of unreformed public sector pensions”.
“The USS is doing the right thing to manage pension costs and public sector pensions are continuing without any real change,” he said.
The differential is also partially caused by different contributions paid by members. The 42,000 staff in the TPS pay between 6.4 per cent and 11.4 per cent of their salary depending on income, whereas some 150,000 active USS members pay either 7.5 per cent towards the final salary scheme or 6.5 per cent towards a career average scheme.
That level is likely to increase to about 8 per cent from 2016, with employer contributions also set to rise from 16 per cent to 18 per cent under any changes.
UCU members at 67 pre-92 universities are currently voting on whether to take industrial action over changes to the USS, with the ballot due to close on 20 October.
