Lecturers should give up ‘gold-plated’ pensions to save universities
Lecturers could lose their generous pensions to stop universities from going under, an education boss has suggested.
Universities say they can no longer afford to pay into the taxpayer-backed Teachers’ Pension Scheme (TPS) amid fears some institutions are on the brink of collapse.
Vivienne Stern, chief executive of trade body Universities UK, has called on the Government to let universities offer alternatives. This could include offering lecturers a pay rise in exchange for quitting the pension, or providing cheaper retirement schemes for new staff.
Her comments come just as unions warn at least three universities are at “serious risk” of collapse within the next two years – and that more “will go under” if nothing is done.
Ms Stern said: “Half the [higher education] sector is required to offer the Teachers’ Pension Scheme. This disadvantages those universities which used to be under local authority control and have to offer it by law, as they get no funding for this.
“All institutions should have the flexibility to offer different schemes. The contribution rate for the TPS has gone up so significantly. It now sits at 28.68pc. That’s one of the highest contribution rates of any employer in the country.
“It’s anti-competitive in what should be a level playing field. Private schools have been given an opt-out option. Most other universities are in the USS [Universities Superannuation Scheme], where contributions are much lower [14.5pc].”
Employer contributions to the scheme rose by 6.7pc this year. Ahead of the increase, Universities UK and the Universities & Colleges Employers Association wrote to former higher education minister Robert Halfon saying they “need[ed] greater control over the pension schemes they provide to their staff, now more than ever”.
Universities formed after 1992 have to offer the TPS to staff, because they were previously polytechnics and owned by local authorities.
Unlike state schools, these universities – which include Bath Spa, Coventry, Leeds Beckett and the Royal College Of Music – do not receive any state funding for staff pensions.
When universities have tried to make changes to staff pensions in the past, it has resulted in years of disruption for students.
Back in 2018, the University and College Union (UCU) kicked off five years of industrial action over a reduction in lecturers’ pension benefits by the USS. Eventually, these reductions were reversed and academics received a collective £18bn back into their pension pots.
The UCU has recommended a 1pc levy on employer National Insurance contributions for graduates to increase funding to universities “at no cost to the Exchequer”.
A spokesman for the UCU said: “If the Government does nothing, universities will go under.
“We have an investigative accountant who has looked across all universities finances. Three are at serious risk of collapse within the next two years.”
Universities’ incomes have more than doubled since 2005, according to the Higher Education Statistics Agency.
But now international student intakes are dwindling, state funding for teaching has fallen by 78pc over the past decade, and fees have been frozen at £9,250 a year for domestic students since 2017.
Bridget Phillipson, the Government’s new education secretary, suggested on Radio 4 this week that Labour will review changes to international student visas which are believed to have been behind the drop in overseas applications.
In January 2024, international masters students were no longer allowed to bring their families over on their student visas – a restriction first announced by Rishi Sunak’s government in May 2023.
Asked about calls from universities to raise fees in line with inflation, Ms Phillipson said: “To your point about whether we have any current plans around university finances, we have no plans at this stage.
“We want to look right across the board to make sure that we are putting our universities on a sustainable footing into the long run.”