It’s a tale as old as time: managers would like to pay workers less.
- staff will receive less income in retirement
- staff will now carry the risk associated with the investments (defined contributions DC) – these risks are currently carried by the employers (defined benefits, DB).
University managers, represented by UUK, have presented the changes as necessary in order to make the pension scheme sustainable into the future. There are reasons to be sceptical:
- in secret discussions UUK members have discussed other motivations:
- the desire to cut staff costs
- concerns about competition and borrowing – shared pension liabilities are affecting the credit which different institutions can access
- the concept that the current scheme is unsustainable is based on a very conservative valuation and a set of tests that is unrealistic for a multi-employer scheme.
- the members of UUK seem divided about their ‘risk appetite’ and willingness to pay greater contributions. It appears that UUK is not accurately representing a consensus view.
It’s not difficult to see that today’s university managers, with their focus on finance and growth at the expense of teaching, learning and research, are likely to be attracted to changes to the pension scheme that will leave them with more money to spend as they wish, and they some of them would also like to gain an advantage over their ‘competitors’. In order to achieve this outcome though, they would need to make the current scheme appear unworkable. Fortunately, from their perspective, they are able to do this merely by expressing an opinion about their appetite for risk.
So that is what seems to have happened. Managers would like to pay workers less, and have found a way to do it. The trick is to sabotage pensions rather than cut wages – it’s in the future so people are less worried about it, and the sabotage element makes it harder to see who’s responsible. But once you see it, it’s impossible to unsee.
Some useful refs: