BREAKING: 2022 cuts to pensions for thousands of university sector workers are to be reversed under an agreement between unions and the university sector.https://t.co/GXnAmgOF0T

— Josephine Cumbo (@JosephineCumbo) October 5, 2023

This is great news for members of the USS and a coup for UCU and UUK who have found a way to resolve a dispute that has led to 69 strikes over the past few years.

The headline tells half the story – the second half is even better.

It restores much of the damage done to benefits by the unnecessary cuts made earlier in the decade as a knee-jerk reaction to a poorly timed valuation of the USS Scheme’s assets and liabilities

But this historic victory may be remembered as much for what the UCU and its members agreed to give up as what they gained. This blog looks in more detail at the statement issued by UUK and UCU and applauds its move towards a lasting solution based on scheme guarantees and the best endeavours of all parties.

The full “historic” statement is set out below

What’s given to members?

1. Restoration of the previous DB accrual

The original proposals from UUK were to move to a DC basis going forward.

2.Reduced contribution rates for members (and employers)

What’s given up by members

I had dinner last night with a senior pensions adviser to UUK (representing USS employers). The mutually acceptable adjustment to scheme design is the adoption of “conditional indexation” , a form of CDC.

The UCU are conceding the right to have indexation of benefits guaranteed. This is a major concession and one that could mean bigger or smaller pensions – depending on market forces and the good management of USS.

Under conditional indexation, members get a guarantee of  a core benefit while increases are “conditional” on the capacity of the scheme to pay. In good times, members may get more than statutory minima , in bad times less.

This allows for employers and members to plan ahead with something much closer to a defined contribution for the scheme as a whole.

This is the innovation of the agreement and that there appears to be sufficient common ground between members and unions on the benefit restoration program, suggests to me and my colleague at dinner, that USS will be partially CDC quite shortly.

The implications for scheme design among other large DB schemes are radical. As with Royal Mail, the agreement of employer to link the benefits paid by the scheme to the ability of the scheme to pay, is a step forward for UK pensions.

USS has come a long way

This agreement between @ucu & @USSEmployers on @USSpensions is very good👇. It’s highly significant that it has the unanimous support of @UCU‘s negotiators. 1/https://t.co/74TL05ExxO

— Michael Otsuka (@MikeOtsuka) October 5, 2023

Congratulations Kate Barker, the newish USS trustee chair and to the USS trustees

Congratulation Joanne Segars and the joint Stability Working Group

Congratulations to UUK and UCU for settling their differences. Jo O’Grady in particular

The deal marks the end of a sorry chapter of pension disputes the reading of which shows many losers and few winners. We must remember that the biggest losers in all this are students who were deprived of teaching. The pandemic was a natural disaster, the 69 strikes were man made.

The new CEO of USS, Carol Young is another woman we can have high hopes for. For the adoption of a stable , permanent and fair benefits basis going forward, is what is needed for our largest private sector pension scheme to punch its weight as a deliverer of productive capital and financial security for hundreds of thousands of academics.

Jane Hutton

And in this, let’s not forget Jane Hutton , an early casualty of this dispute, for whom this victory must be bitter-sweet.