Hundreds of thousands of college-sector employees in the UK will see retirement pension cuts in response to employer proposals to stop “unfair” contributions from growing as the sector struggles with years of pension crisis.
According to a plan released on Wednesday by a UK university representing more than 340 employers in the higher education sector, guaranteed pensions for around 200,000 out of 460,000 members will be less tolerant and higher-income scholars will endure the biggest cuts.
Presented to members as part of a seven-week consultation, the measure responds to a recent financial status check that estimates that the funding shortage for a £80 billion college pension plan has increased from £3.6 billion to a maximum of £18 billion in two years. is. .
To close the loophole, the USS said that to keep the current pension intact, the contributions of employers and members must be increased from the combined 30.7% of their current salary to 56%.
However, both employers and employees have branded the impressions as “not cheap” and UUK hopes that other offers will protect as many benefits as possible while keeping contributions at the same rate.
The USS is a hybrid scheme with defined benefits with incomes of up to £60,000. Contributions for salaries that exceed this limit are paid in a more risky, defined contribution plan with no guaranteed retirement income.
UUK proposed the introduction of a “flexible” option for low-paid employees. Instead of paying for a guaranteed defined benefit plan, you can save on a more risky defined contribution plan with a lower contribution rate than if you currently have a defined benefit plan.
In addition, the salary limit for defined contributions was lowered to £40,000, suggesting that high earners would receive much less guaranteed pensions. Currently, about 45% of members who join the scheme earn less than £45,000.
UUK Chairman Julia Buckingham said the employer’s offer sought to keep contributions affordable and reduce prices in pensions while maintaining a valuable pension scheme.
The employers group also said it will continue to push the USS to rethink the value of pension plans that both employees and employers have claimed to be overly pessimistic.
Buckingham said that UUK “expressed disappointment” in the evaluation and “underestimated the collective power of participating employers.”
“If the USS Stewardship Committee cuts down on unnecessary and improper plans, it would be disastrous,” she said.
However, the University College Union, which represents faculty, says that UUK’s attempts to confront pension trustees on valuation seem to be “weak” and “when they can afford to take a more progressive approach” are unnecessary and harmed. Blame the group for “proposing cutbacks for giving.”.
Jo Grady, Secretary General of the UCU, said, “College employees deserve far better than the weak promises and half-made offers that employers are making. “Currently, employers have made few proposals to persuade members from voting for another industrial action.”
Employers are also being asked whether they can provide additional financial assistance to reduce the increase in contributions, and whether they can increase the length of time they have to remain in the scheme. This will address USS’ concerns that large employers may weaken the system by leaving the company, and means repaying the deficit over the long term will reduce the annual cost of individual employees.
Separately, on Wednesday, UUK urged the government to allow students to return to the university for face-to-face education after the university was not included in the updated roadmap for declosure.
Buckingham said it is “irlogical” that students taking non-essential hands-on courses cannot return when gyms, parks, theme parks, public libraries and community centers are open.
In response, the Ministry of Education said it would “review options for return timing for all remaining students by the end of the Easter holiday.”
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