University pensions! – Stay collective! Stay open!


The Babbage Lecture Theatre – Cambridge

Another good day for pensions!

Yesterday was a good day for the collective pension scheme in Britain. I had breakfast at Cicero’s offices in the Old Bailey (not the courts). I was able to hear our Pensions Regulator talk openly about the regulation of CDC schemes (Chatham House prevents more- but take it as positive).

As I took the train up to Cambridge, I talked with those close to Royal Mail who are enthusiastic at the progress made with DWP in establishing a way forward for their (and other) CDC schemes. This was what John Ralfe would call – “nuts and bolts” stuff.

When I got to my Alma Mater, I was amazed to discover 200 dons had turned out to a pensions meeting organised by Cambridge UCU to look at alternative ways of keeping their pension collective and open.

If you want to see what was discussed, I understand the event was filmed and that we’ll soon be able to watch. For the meantime, here are the my First Actuarial slides – easily downloadable for those deprived of sleep!

Wanting the best.

I hope I managed to avoid the trap of enthusing about CDC to the dons. My reason for being at the meeting was to stress the importance of keeping collective schemes open, whether they offer pension guarantees (DB) or simply pensions (CDC).

Obviously, given the choice, we would prefer our pensions guaranteed, and here there is a question of affordability. Much of the protracted question time that followed yesterday’s presentations, concerned the quality of the covenant offered by the educational system.

Can you compare USS – designed to provide deferred pay to university lecturers, to schemes for employers like Carillion or British Telecom?

Is a better comparison, a public service scheme or should we consider the total reward offered to UK academics uniquely geared to balancing immediate and deferred pay?

The best for the best

For me, and I got passionate about this, the success of the British University system (and we have around 15 of the top 50 universities in the world) is down to the quality of teaching. In the audience yesterday I heard American, European and Far Eastern voices. People want to teach in our seats of learning because the gold gathers the light about it.

Supposing that we should be benchmarking success with failure seems wrong. Carillion, BHS and to a lesser extent BT and the Coal industry, are business failures that led to pension failures. The businesses failed to meet the targets they set and had to close their DB schemes. BHS sits as a zombie scheme, BT’s pension scheme is an albatross around its sponsors neck and the Coal Industry Pension Scheme is saved from insolvency largely due to the physical damage mining did on its staff’s long-term health. None of these schemes have stayed open, all have been closed because (for whatever reason) the business failed.

This is the critical point for UUK (the employer federation of our Universities). You are not presiding over failure and the reason for your success is not your management policies but the people you employ. Part of your covenant to your brilliant workforce is a pension promise that lasts as long as they do. By “they” I do not just mean the people listening to us yesterday, but those subsequent generations of academics coming through schools and colleges today and the great academics of the 22nd and 23rd centuries who have yet to be born.

If you are a Vice Chancellor, you think two or three years ahead, if you are looking at our educational system, you should think two or three generations ahead.

CDC or DB – the show must go on.

Whether the system that pays deferred wages in retirement is guaranteed (DB) or simply pensions (CDC), the schemes must stay open. Closing schemes like USS is financial vandalism. The architecture of university pensions must stay the same , though the apparatus by which pensions are delivered may be adjusted to meet changing times.

As I came back yesterday afternoon with Con Keating, remarking from my bus to the station how little things had changed since when I “went down” in 1983. The buildings have changed (a little), but the people are still the same. University towns are special and different but that’s because they absorb a different type of person. Our academics are of immense cultural and commercial importance to Britain and we rightly cherish our university towns as the hot-beds of fresh thought. They have delivered, are delivering and – given a following wind – will continue to do so.

So this ridiculous struggle by the Universities to pretend that University lecturers can be likened to those in the commercial sector is wrong. If you open the presentation above, the first page will show those dons who made a difference to me. Some are still to retire, some are drawing their USS pension and some are dead  (some with surviving spouses still being paid). Why I got emotional, was that I was overwhelmed with gratitude for having the university system that supported and continues to support them and their teaching.

I work in the City. I have no links to Universities (other than my son at Girton Cambridge), but the thought of Britain losing its academic predominance as our top lecturers become devalued and disillusioned , is one I’m not prepared to entertain.

Any more than I’m prepared to see postal workers, who work a lifetime for Royal Mail, not get their wage for life.

It happens that my employer, First Actuarial, is fighting for the pensions of both groups , through UCU and CWU respectively.

Some proper thanks

I’m very proud that I’m a part of their work (albeit not the maker of the nuts and bolts).

I’m very grateful to Cambridge UCU for the chance to speak yesterday and for the dons for listening (and for the messages of support after). I’d also like to thank those from the University (Andrew Aldridge (Head of Internal Comms) and  Anthony Odgers (CFO) ). They listened to my  and other’s comments with patience and good humour.

Events like this enable the two sides in this long and bitter dispute to come closer together. I hope the Joint Expert Panel is a success and that we can move beyond 76.4 into the next decade with a lasting open pension scheme – whatever the acronym.

Cambridge colleges

and Rosencrantz and Guildenstern




About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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1 Response to University pensions! – Stay collective! Stay open!

  1. Con Keating says:

    Henry I think that the DB / CDC preference question revolves around a very simple point. Yes the guarantee of DB is preferable in principle but we then also need to consider the quality and cost of that guarantee. The quality aspect needs to recognise that there is a risk of failure, though vanishingly small in the case of USS, that DB schemes in common with CDC only have finite resources from which to pay pensions. On the cost front, de-risking has much to answer for.

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