Universities union calls for more investment in staff after pension scheme boost

UK universities unions accused bosses on Monday of failing to invest in staff as the sector’s pension fund moved into surplus months after a sharp cut in pension benefits was imposed on thousands of members.

The intervention by the Universities and Colleges Union comes ahead of a vote on strike action next month, part of a long-running dispute over pay, pensions and working conditions.

Joe Grady, the UCU general secretary, accused university chiefs of “hoarding billions of pounds in cash” as the union published an analysis of the finances of the 145 higher education institutions involved in the dispute.

In total, their cash holdings and liquid assets were found to have risen by £3.4bn in the 12 months to April 2021, while staff costs rose by just £200m. Combined revenues rose to £41.1bn from £39.6bn in the previous year.

Grady accused the vice-chancellors of 145 institutions of “withholding staff salaries, slashing pensions and putting thousands in hardship” and urged them to use some of the surplus to improve pay and conditions.

The University and College Employers’ Association (UCEA), which represents vice-chancellors in pay disputes, said the overall figures “mask[ed] significant difference between [higher education] institutions” that differ significantly in their financial stability.

“Each institution has a legal obligation to balance its books and the nationally agreed pay rise must be available to all 145 institutions,” UCEA added in a statement. “Very . . . institutions are working hard to avoid layoffs and others are struggling to balance their budgets to maintain staffing levels while delivering this year’s pay rise into staff pockets.

Attempts to step up pressure on employers by the union followed the publication late last week by the University Pension Scheme (USS) which showed the sector’s £77bn pension fund had a surplus of £1.8bn – the first since 2008 Mr.

The fund’s move into surplus comes less than 18 months after an assessment, carried out as global markets tumbled in the early days of the coronavirus pandemic, identified a £14bn shortfall in the scheme, which has 500,000 members.

The huge hole sparked industrial unrest as vice-chancellors tried to plug the shortfall by pushing through pension cuts for the 200,000 paying members into the USS, the UK’s largest private sector defined benefit scheme.

The UCU, which represents more than 120,000 teaching and administrative staff, said the scheme’s move to surplus means employers must act immediately to reverse cuts to new pension accruals imposed in April this year. The union estimated the measure would cut a typical teacher’s guaranteed pension by a third.

“We have said time and time again that USS is an extremely strong pension scheme with excellent long-term prospects. The news that the scheme is in significant surplus is just the latest evidence of our position,” Grady said last week.

Bill Galvin, chief executive of USS, wrote to employers suggesting that improved finances could prompt discussions about increasing benefits or reducing pension contributions.

However, he added that “caution” was needed due to uncertainty around rising inflation and interest rates in a volatile economy and the fact that the improvements were identified as part of a monitoring report rather than a full official assessment of the pension fund.

Universities UK, the sector’s trade body, said the surplus was “positive news” but dismissed calls for pension cuts to be reversed immediately, noting markets remained “highly volatile”.

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