The ongoing university lecturers’ strike, backed by 88 percent of the balloted votes, was called by the University and College Union (UCU) in protest against the threatened imposition by employers of a new set of ‘defined contribution’ pension arrangements that would expose retirement pay to all the ups and downs of the market and slash an estimated £10,000 per year off the pension of a typical lecturer.
As the strike rolled into its third week, bringing disruption to universities across the country, cracks started to appear amongst their employers, with 16 vice-chancellors, including the VC for the University of Cambridge, breaking with the obstinate stance of their negotiating body Universities UK (UUK) and urging renewed talks with the union.
Pressure on UUK to return to the negotiating table was increased by the impressive level of support given by students on picket lines, rallies and marches, culminating in student occupations at Bath, Bristol, Exeter, Leicester, Liverpool, Reading, Southampton and Sussex.
On 5 March, UUK wavered under pressure and agreed to discuss an alternative proposal tabled by the UCU, with talks under the dubious aegis of Acas. Further talks have stuttered on since, whilst so far (as of 7 March) the strike pressure has been maintained.
Some lecturers are drawing parallels with the junior doctors’ strike and its frustrating outcome, concluding that the lecturers’ strike should be maintained to keep up the pressure on UUK now that it has agreed to talk. To suspend the strikes now, or to blindly accept an ‘independent’ fudge from Acas, would clearly risk a repetition of the junior doctors’ debacle.
Above all, lecturers should not be browbeaten into believing that pension deficits (real or imagined) are something for which they bear any responsibility.
In any job, it is up to employers to decide how they are to discharge their responsibility towards their employees and pay them that portion of their wages that have previously been deferred to cover their retirement years.
Because that is what pensions in essence are: not a pat on the head for services rendered or a bonus for good behaviour, but simply the belated payment of deferred wages.
No amount of handwringing by employers pleading demographic shifts, straitened circumstances or an unlucky throw of the dice in their pension fund investments can hide this basic fact.
It is up to Universities UK to decide how not to defraud the average university lecturer of £10,000 a year, not up to the lecturers to decide whether to tighten their belts by one hole or three so as to ‘share the pain’ of austerity and marketisation. UCU negotiators should bear this in mind.
‘Collective defined contribution’: a poisoned chalice
Last month saw a dodgy deal concluded between Royal Mail (RM) and the posties’ union, the CWU (Communication Workers Union). Just how bad this agreement threatens to be for workers may best be judged by the near-ecstasy with which it was greeted by Patrick Hosking in the Times.
Noting that RM shares have climbed 50 percent since November, making it “a near-cert to be readmitted into the FTSE 100”, Hosking ascribes this meteoric rise mainly to “the peace deal Royal Mail recently struck with its union, the CWU”.
The cause of this joy is the prospect that “the final-salary pension scheme is finally being ditched”, so ending a problem that has “bedevilled the company for years”.
The postal workers have till now enjoyed a defined benefit pension linked to salary, guaranteeing them a retirement income little affected by the vagaries of the market. Now, in this brave new world, all previous guarantees are to be torn up and, to quote Hosking again: “the company’s 142,000 posties, sorters and drivers are guinea pigs in a giant experiment in financial engineering”, with their union graciously waving the whole shebang through.
In Hosking’s choice phrase, the RM and the CWU “are purring together like pussycats”. (Royal Mail’s decision to go Dutch is pushing the envelope on pensions, 27 February 2018)
Hoskings’ effort to explain how the proposed ‘Collective defined contribution’ (CDC) scheme is supposed to work raises as many questions as it it answers.
“CDC, in essence, socialises investment risk among different workers and different generations. Schemes stay invested in riskier assets and so generate higher returns. Smoothing means no particular cohort misses out just because they happen to be unlucky in the timing of a bear market.”
Or, to put it in a less glass-half-full way, ‘smoothing’ means workers sharing the pain when the market fouls up. The one certainty in all this is that the employer reneges on his responsibility to the workforce, and the workforce are ‘collectively’ left to fend for themselves through all the crisis-driven volatility that the markets hold in store.
By agreeing in principle to this arrangement, the CWU is not only compromising the retirement income of its own members but opening the floodgates to a host of similar glorified Ponzi schemes.
CDCs are not even legal in this country yet, and will require the rewriting of labour law. Doubtless the precedent set by the Royal Mail deal will be cited in justification of such legislative changes.
As Hosking slyly adds: “Striking university lecturers won’t like it, but some argue that a CDC scheme is the obvious successor to their USS defined-benefit scheme.”