Unions call for action over the pay award and proposed changes to the USS
Ballots over industrial action
On Monday 9 September UCU and UNISON issued ballots to their respective memberships calling for industrial action in respect of two issues:
- the 2019/20 national pay award, and
- the proposed changes to the contribution rates for the USS pension scheme
The following information aims to provide updated, impartial, factual information on what has happened thus far, and the current situation.
Each year national level talks are held under the Joint Negotiating Committee for Higher Education Staff (JNCHES) which form the basis of the annual pay review. The University and Colleges Employers Association (UCEA) is responsible for representing the participating employers in the JNCHES negotiations on the national pay award for 2019/20. Pay negotiations conducted between March and April this year resulted in employers making a final offer for the national pay award of between 1.8 and 3.65% (with staff at lower grades receiving the higher % uplift). More than half of the academic and professional services staff covered by these arrangements are also eligible for pay progression, and these staff will receive a total average salary uplift of approximately 4.8%.
The employers’ final offer was rejected by the five participating trade unions nationally, and the dispute resolution procedure was invoked, and has since concluded following two dispute resolution meetings on 16 and 25 July 2019. In the absence of agreement, and in common with other HE institutions, the University of York implemented the final offer of 1.8% (with increases of up to 3.65% for our lowest grades).
UCU and Unison have each informed the University of York of their intentions to ballot their respective members with respect to the national pay award, and we understand that the ballot opened on 9 September 2019 and will run until 30 October.
USS members will have received communications directly from USS regarding the planned changes to contribution rates over the last year. These are summarised below:
|Existing contribution rates||Scheduled contribution rates already shared with scheme members||Proposed rate based on 2018 valuation|
|pre-April 2019||April 2019||October 2019||April 2020||October 2019|
UCU and UNISON have issued ballots for industrial action to their members in relation to the planned increases to pension contributions for scheme members.
The parties involved
There are several parties involved who all play a different role in the USS scheme:
- Universities Superannuation Scheme (USS)
- Universities Superannuation Scheme (USS) Trustee
- The Pensions Regulator (TPR)
- Universities UK (UUK)
- Joint Negotiating Committee (JNC)
- Joint Expert Panel (JEP)
- University and College Union (UCU)
The story so far
The USS Trustee has to obey legal requirements to undergo regular valuations (at least every three years) of the USS and submit them to the Pensions Regulator. A valuation is a financial health check of a pension scheme to ensure the Scheme can pay the pensions of all their members.
The USS completed its triennial valuation as at 31 March 2017 and declared a deficit in the scheme of £7.5bn. Following a failure to reach agreement on how to address this deficit, UCU initiated strike action during 2018.
An agreement to suspend strike action was reached when UCU and UUK resolved to establish a Joint Expert Panel (JEP) to explore opportunities to create an affordable and sustainable future for the Scheme.
In the meantime, the USS Trustee concluded the 2017 valuation by implementing new contribution rates, after consultation with scheme members, that resulted in a total contribution rate of 35.6% scheduled to be fully implemented by April 2020 on a shared cost ratio of 65:35 split between employers and members respectively. This will be achieved through interim increases for scheme members and employers in April 2019 (already implemented), October 2019 and April 2020. Contributions increased in April 2019 to 8.8% for members (19.5% employer). A further increase is scheduled to be implemented in October 2019 that means members will have to contribute 10.4% of salary and employers will contribute 22.5%. A further increase is scheduled for April 2020 that will see members contribution’s increase to 11.4% and employers’ contributions rise to 24.2% (see previous table).
Set against the outcome of the 2017 valuation, in September 2018, the JEP panel’s first report proposed an alternative way forward that would in their view retain the existing benefit structure and address the deficit through an estimated contribution rate of 29.2% of salary, based on 9.1% member contributions and 20.1% employer contributions. Following joint support for the JEP report from UUK and UCU, the USS Trustee agreed to undertake a new valuation of the scheme as at 31 March 2018. This valuation has been the subject of a number of consultations and extensive engagement with USS Trustee board, employers and UCU. The University of York have engaged in a number of consultations and submitted our responses.
- A response by the University of York on 2018 valuation proposals - March 2019
- A response by the University of York on 2018 valuation proposals - June 2019
- A response by the University of York on 2018 valuation proposals - July 2019
- A response by the University of York on 2018 valuation proposals - September 2019
In response, the USS Trustee has presented a moderated proposal: a 30.7% combined contribution rate. This alternative proposal was put to the Joint Negotiating Committee (JNC) as a means of ameliorating the proposed increases in contribution rates.
On 22 August 2019, the JNC decided that the proposed 30.7% combined contribution rate would be introduced using the established cost-sharing ratio of 65:35. This means that from 1 October 2019, 21.1% of the contribution would be paid by employers and 9.6% paid by members. A combined contribution rate of 34.7% would then be implemented from 1 October 2021 (11% for members, 23.7% for employers). This new proposal would mean contribution rates are lower than the contribution rates due to be implemented in October 2019 and April 2020 from the 2017 valuation. The new proposal also means that there is no change to the existing benefit structure.
This approach was agreed by JNC members representing employers. However members representing UCU did not agree to the proposal. The JNC therefore was only able to make its decision based on a vote cast by the Independent Chair of the JNC who voted in favour of the employers’ position.
UUK made a further formal offer to the UCU negotiating team (contingent on approval from employers following consultation) to allocate the 30.7% total contribution differently: namely for employers to pay an additional 0.5% contribution for two years, thereby reducing member contributions from 9.6% to 9.1% for that period, on the condition that the trade unions withdrew their planned ballot for industrial action. The UUK offer of 9.1% mirrors the recommendation from Phase 1 of the JEP for a proposed member contribution rate.
Nationally, UCU has not accepted this revised offer and we understand that their ballot for industrial action over the proposed changes to the USS scheme commenced as planned on 9 September. We also understand that Unison has similarly begun a ballot of its members.
You can read the statements issued by UUK and UCU concerning their respective positions.
- USS information on the 2018 valuation - 23 August 2019
- UCU statement on pensions valuation - 3 September 2019
- UUK response to UCU valuation - 4 September 2019
- UCU news release on ballots - 6 September 2019
- UUK response to UCU rejection of offer - 9 September 2019
- UNISON news on ballot for strike action - 9 September 2019
All parties await the result of ballots issued by those trade unions deciding to seek industrial action.
The University ran a series of presentations over the summer, presented by Mercer, to help staff members understand the current situation surrounding USS. These are being repeated in the next few weeks, and there will also be a presentation by the Finance Director, Jeremy Lindley, on the University’s financial position. You can reserve a place to attend one of these sessions using the links below:
- Monday 23 September 9am - 10.30am Chemistry C/A/101
- Wednesday 16 October 3pm - 4.30pm Piazza Building PZA/103
What happens next?
The timeline below includes known dates and milestones related to the conclusion of the 2018 valuation. The timeline is subject to change depending on the nature of any decisions taken by the Joint Negotiating Committee, the outcome of the ballots and any subsequent negotiations between UCU and UUK.
Concluding the 2018 valuation - indicative timeline
- 9 September 2019: UCU and UNISON ballot on pay and pensions
- 11 September 2019: Meeting of the USS Trustee Board
- Mid/late September: Members formally advised by USS of contribution rates from 1 October 2019
- 1 October 2019: Second contributions increase implemented for employers and members
- 30 October 2019: UCU ballots on pay and pensions planned to close
- 1 April 2020: Third and final contributions increase implemented under 2017 valuation comes into effect (unless superseded by 2018 valuation)