Why I strike

Feb 23rd 2018

Academics face a massive pension cut

It pains me to have to cancel lectures. If the dispute is not resolved soon, students in Introduction to Philosophy will miss 4 out of 5 lectures on Metaphysics. I deeply regret it, but I feel we are left with no choice.

We strike to force employers to renegotiate our employers’ proposed drastic changes to the academic pension system. The current system is a scheme involving most UK universities. It is partly collective (we all put in a collective pot) and partly individual (each builds their own investment). It offers defined benefits: we know what we get. The proposed system would switch to defined contributions (you know what you pay, not what you get) and wholly individual. The changes will reduce our pension, possibly by a lot (roughly £500-£1000 a month, that is a third or a half or your pension, or the equivalent of paying full UK universities fees every year of your retirement). The changes will also make our pension less safe, as each person’s pension will depend on the performance of the market while they build their individual investment.

In clear, the proposed reform is a massive pay cut. It is not the first ones. It comes on top of 2011 reforms that already reduced the level of academic pensions.

The cut is supposed to address a deficit, but it’s dubious that the deficit exists

Why are the employers proposing this? They say, and you may have read, that the scheme is “in deficit” (soaring from £5bn in 2014 to £17bn on some or accounts, of £6bn on others). This may sound as if the scheme is losing money right now. That is not so: the fund is currently gaining money. The defecit” is an estimated deficit. It compares how the fund is expected to grow with how much pension they expect to have to pay out. That is called the “valuation” of the scheme.

The valuation is dubious and disputed by the employee’s union, however. In short, it looks at whether the scheme could pay everybody’s pension if all the UK universities were to suddenly go bankrupt and stopped paying into it. That kind of valuation (mandated by the government) makes sense of a company: if the company goes bankrupt you want to make sure that its employees still get their pensions (see Carillion). But with a collective of 355 higher education institutions including 62 universities (including all the ones you’ve ever heard of), that is a purely hypothetical situation. If some universities were to go bankrupt their students who go to others, which would grow accordingly; and if some catastrophic event destroyed all of the UK’s higher education system we’d have more pressing things to worry about than academic pensions. Moreover, the forecast is probabilistic: even in that hypothetical situation it is still more probable than not that the system could pay pensions out. The employee union has provided an independent evaluation that concludes that the scheme is sound. Still, the employers union UUK judges that they find the risk too high.

(More doubts about the valuation here and here. One of the paradoxes is that the employers insist that the fund invests more in low-volatility, low-return assets. Under that assumption the fund makes less money, so the estimated deficit is higher. So they put the fund at a higher risk of default by asking for it to be less risky.)

It also appears that the employer’s position was strongly influenced by the votes of Oxford and Cambridge colleges’ bursars. Oxford and Cambridge are by far the richest universities in the UK, and their financial staff seems keen to make sure that they do not have to pick up the tab in the event that some other university goes bankrupt. In the light of this, I was glad to learn that the Vice-Chancellor of Cambridge is now calling for negotiations.

So I and many colleagues find the grounds for cuts highly dubious. There are some independent observers who find the deficit serious, perhaps even more serious that the USS recognizes: see this informative account of the pension reforms in a financial magazine. However it doesn’t address the fact that the deficit is estimated on the basis of a hypothetical bankruptcy (at least not in terms I can understand!). Be that as it may, the employers’ union, UUK, has not said anything to make us trust their valuation. They simply keep repeating that the scheme is in deficit and unsustainable.

We have no say on how to address the alleged deficit

Even if the scheme was in deficit, reducing it need not involve changing the nature of the pension system. We can contribute more. We can keep it collective. Individual pensions are more risky. I, for one, am unhappy that employers want less volatile investments for the fund but impose more volatility on us. The employers’ union rigid stance in the joint committee has deprived us of any say on the matter.

Many of us have no interest in taking risks with the fund

We are not mindlessly asking for more money. If the fund does run a deficit in 20 years from now, junior staff like me who will only retire then or later are going to pay the price. We have no interest whatsoever in ensuring that current pensions remain generous by sacrificing ours. We simply have no faith in the employers’ evaluation and motivations.

The cut may be part of a broader move towards for massive student-churning, profit-making universities

The Convention for Higher Education (a group of academics and activists) suggests that the universities’ attempt to reduce their pension liabilities results from longer term evolutions of UK universities. The pension scheme we’re talking about (USS) involves few new (post-1992) universities but all “traditional” (pre-1992) ones. As a result of the fee system, the removal of student cap numbers, and the government’s policy of encouraging competition and growth, many traditional universities are involved in massive investment and growth programmes. University College London, for instance, has doubled its student numbers between 2007 and 2018 - from about 20000 to about 40000, and considering going up to 60000. Let that sink: UCL now is enough to make up two times UCL of ten years ago! (For the record over thesame period King’s has modestly increased from about 21000 to currently about 26000.) The investment programmes involve huge loans. To get cheaper loans universities must give evaluations of their liabilities. One way for universities to reduce their liabilities is to reduce their commitments to staff pensions.

Whether that’s one of the factor of the proposed cuts I can’t say for sure, but I find it plausible.

More generally, we are worried that the pension cuts are one more step towards a system where we maximize student numbers and minimize staff costs in order to finance branding and other irrelevant ways of attracting students, prestige projects, and unbridled growth. Such changes would make our life and that of our students miserable and would greatly devaluate higher education.

Our only option is to strike

The employee union has voted against the reform, the employer union for. The employer union has refused to negotiate to reach a consensus position. The technical chair of the board has sided with the employers.

We now have no other way of bringing the employers to the negotiating table than to strike. The strength of feeling among academics is so strong that the strike is set to be the largest ever seen in UK higher education.

We hope that an extremely strong showing on the first days of strike will convince the employers to renegotiate. Eleven university heads are already breaking ranks and calling for talks. The universities minister is calling for talks. The employers union says it wants to talk, but still [refuses to re-open the pension negotiation(https://www.ucu.org.uk/article/9358/University-and-College-Union-response-to-UUK-call-for-talks?list=1676).

We need student support

We are painfully aware of the fact that students are first hit by the row. We are grateful for the understanding and support that many have given. We are glad that the student union is standing with us.

If you want to support the strike you can stay out of classes, stand with us on the picket line and take part in the teach-outs that are organized (see here). You can also write to the Principal to urge them to call on the employers union to come to the negotation table.

And what about compensation?

Lecturers on strike are not paid, so the universities saves a substantial amount of money on the strike. At King’s the Principal has promised that the money will be ring-fenced and used for the benefit of students. Some students are asking for compensation over lost classes. Student and academic unions have advocated against this, arguing that it entrenches a consumer model of higher education.

From my point of view the compensation would have at least the effect of showing how little of your fees is actually spent on lecturer pay. By a generous measure I count that the university spends about £200-300 per lecture I give. (That’s counting one workday of preparation, which is generous, and that doesn’t all go in my pocket, but includes taxes on both employer and employee side.) That’s £10 per student in a class of 20, £2 in a class of 100. Let’s put seminar groups at a generous estimate of £10 per student too. So four weeks of missed lectures in two modules may only amount to £100 to £240 of your yearly fees in terms of staff pay.

This is not to say that fees that don’t go to lecturers are wasted :)! We need our terrific professional services teams to make sure everything runs smoothly, and research equipment, buildings, IT, librairies and so on are crucial to your education too. But it may be a good occasion to reflect on what really matters to make your years at university worthwhile and where our priorities should be.