Message to Staff from the President and Provost to Update on Pensions Talks - 13 March 2018
Last night UUK and UCU announced they had reached a negotiated agreement for a revised benefit reform proposal under the auspices of ACAS. The revised proposal covers a transitional benefit agreement to take effect from 1 April 2019 for three years. In summary, it will maintain a meaningful level of defined benefit for scheme members by implementing the following changes:
- Employer contributions will rise to 19.3% of salaries (an increase of 1.3%)
- Employee contributions will rise to 8.7% of salaries (an increase of 0.7%)
- The salary threshold (the salary up to which defined benefits build up) will change from £55,550 to £42,000 while the accrual rate will be reduced from 1/75th to 1/85th and indexation and revaluation will be capped at CPI up to 2.5% p.a.
A more detailed summary of the agreement is included at the end of this message.
Last night we consulted with members of Provost’s Board and have their unanimous support to accept the terms of the revised proposal. This morning we responded formally to the UUK consultation to this effect.
We urge all UUK and UCU members to back the revised proposal and allow it to be put to the USS Trustees and the Pensions Regulator for approval. If this proposal is rejected by members the formal recommendation from the JNC would revert to the employer proposal from 23 January. This would risk further industrial action and disruption to students. The commitment from UCU to suspend industrial action until the USS JNC meeting and to encourage members to prioritise the rescheduling of teaching are welcome developments.
The negotiated agreement contains important commitments to finding a long term solution to the issues and concerns you have raised with us. UUK and UCU have listened to our concerns about the assumptions, data and modelling approach used by USS and have accepted our proposal to convene an expert group to examine the valuation. We will encourage and support members of our own Imperial expert group to participate in this.
In our message last week we recognised the need to develop a more thoughtful and balanced approach to pension provision beyond the current simplistic split between Defined Benefit and Defined Contribution and announced we would be funding Professor Axel Gandy to explore alternative approaches. Professor Gandy’s work will make an important contribution to the meaningful discussions promised by UUK and UCU in their agreement to explore risk sharing alternatives for the future from 2020.
While the revised proposal is considered by the key national organisations we will continue to progress our plans to support our staff and provide greater transparency.
Last week you received a detailed information pack on staff demographics, pay and benefits across the College. This information is for you to use in a wider discussion on our priorities for the pay and benefits review – including factoring in the impact of the revised pensions proposal announced yesterday.
We will continue to keep you informed of any developments, as well as progress on our own plans.
Alice and James
Summary – Agreement reached between UCU and UUK under the auspices of ACAS
- A transitional benefit agreementhas been reached from 1 April 2019 for three years
- Employers will pay 19.3% of salaries (for 3 years)
- Members will pay 8.7% of salaries (for 3 years)
- The salary threshold will change from £55,550 to £42,000 while the accrual rate will be reduced from 1/75th to 1/85th
- DC contributions above the salary threshold remain at 12%
- Death in Service and Ill-health benefits are retained as DB on full salary adjusted in line with the revised accrual rate
- Indexation and revaluation will be capped at CPI up to 2.5% p.a
- Given the concerns raised by some employers and UCU about the scheme’s valuation methodology and assumptions an agreement has been reached between UCU and UUK to convene an independent expert valuation group
- The group will be independent, involve academics, and to inform the next USS valuation, it will complete its work by the end of 2019.
- By recognising the agreement on benefits is set as a transitional 3-year solution there is commitment between both sides to engage in meaningful discussions as soon as possible to explore risk sharing alternatives for the future from 2020, in particular Collective Defined Contributions (CDC)
- UCU have a meeting of their Higher Education Committee (HEC) and their Branch representatives 13 March. After that meeting concludes (due early afternoon on Tuesday) UUK expect that UCU will suspend industrial action from and including Wednesday 14 March. That suspension is expected to remain in place until a USS Joint Negotiating Committee (JNC) takes place.
- The consultation scheduled to start on 19 March has been suspended until a decision on this revised proposal is made.
Professor Alice P. Gast, President
Professor James Stirling, Provost
Imperial College London