The Open University (OU) is one of more than 340 higher education and related institutions across the United Kingdom that participate in the Universities Superannuation Scheme (USS). With effect from Monday 25 November 2019, the University and College Union (UCU) has announced it is taking eight days of strike action. This is around two separate disputes, one regarding increases in pension contributions that staff are now paying, an increase of 1.6% of salary since April 2019, and a second on pay and working conditions. This is a national strike and is affecting the OU as well as over 60 other institutions across the UK.
Pension dispute explained
In regard to the pension dispute, the latest valuation of the scheme, conducted for the independent trustees of USS, confirms there is a significant deficit and that the cost of maintaining future benefits has increased substantially. It is understandable that any contribution increases are unwelcome, but given the financial position of USS, changes to contributions are necessary in order to continue to provide staff with a long term viable and financially secure pension scheme. There will be no changes to the benefits staff receive as part of their USS pension.
The issues are complex, but the University’s position is clear. The scheme must remain affordable and sustainable in order to ensure that members’ interests are protected. However, in order to do this, the deficit and rising cost of new benefits must be addressed. If current benefits are to be maintained, then increasing the contribution rates that both University employers and employees pay into the scheme is the only option to meet these higher costs and protect the long term sustainability of the scheme. The University’s contribution rate to staff pensions has increased by 3.1% of salary since April 2019.
Pension contributions and the 2019/20 pay award
UCU are asking employers to reduce employee contributions to 8.0% of salary (which is what they were prior to April 2019). This would mean employers absorbing the additional 1.6% of salary contribution that staff would no longer be paying, in addition to the 21.1% contribution rate employers pay now. Unfortunately, this is neither consistent with the Scheme’s cost-sharing rule for contributions nor sustainable. As a financially responsible institution we need to be clear that an employer contribution of 22.7% would put significant additional burden on the OU’s financial position and further increase the existing pressure on our services and our staffing levels which ultimately would impact on our students.
For the 2019/20 academic year, colleagues working across the higher education sector received a minimum 1.8% pay award, with colleagues on the lower spine points receiving up to a 3.65% increase. For the OU this translated to a c.£5.6m investment in staff. Over the last three years staff across the higher education sector have received a total pay award of at least 5.5%, with eligible colleagues also receiving an annual increment. When considering whether the nationally negotiated pay award is reasonable, we must balance our desire to offer a pay settlement that recognises the high value we place on our staff but is also mindful of the responsibility all institutions have towards their financial obligations, our staff and our students.
Industrial action is always regrettable. However, our priority during this action is to minimise the impact on our students as far as possible, and we are confident that the majority of OU staff will be working as normal during this period. However, we welcome ongoing talks and negotiations at a national level between our representative bodies, the USS trustee and UCU which we hope will come up with a solution to resolve this current dispute.
In support of this statement we have produced some FAQs which provide more detail around some of the more complex elements of the current issues with USS pensions.
Universities UK and UCEA have published an open letter to universities affected by the industrial action. This letter sets out their position in terms of the ongoing negotiations with UCU on both the pension and pay issues.