Defend USS

I teach social policy. I just wrote this blog post for my students on the VLE using the current industrial dispute as a learning point:

Why essay 3 is important in understanding why your essays might not be marked very quickly

At the moment I'm reading this book Good Times, Bad Times by John Hills. It came out last week, so I couldn't add it to the reading list, but it will be pretty much required reading for next year. It's very good indeed and very easy to read. I find reading academic texts hard work. I bought the book from the university booksellers on Saturday and I'm already half way through it which gives an indication of how easy a read it is. Chapters one, two and four would be particularly useful for the Universal Credit essay, four in particular. I've asked the university bookshop to get five in stock and they'll be there early next week in time for your essay, or you could order it from the publisher at a discount by following the above link, or from your favourite non-tax-paying internet bookseller.

The argument the book focuses in on is one that is obscured from public debates on "welfare" (see the current controversy over the way the UK Government is defining "welfare" in its "tax statements" we'll all be getting) is that much of the welfare state actually redistributes resources over time - we don't all earn the same over our life times. All your Beveridge essays on Want focused on how Beveridge wanted to make sure people with blips in their earning potential would not end up being desperately poor. John Hills' analysis unpicks in amazing detail how this is done.

The biggest transfer is between people who are in work and people who have stopped work because they are old - pensioners. They get their income from the state pension, pension tax credit, other benefits, and occupational pensions and individual pensions. At the moment my union - the University College Union - is in dispute with our employers over changes to our pension. You might have read about this. At the moment we have started an assessment boycott, so until the dispute is resolved myself and other academics in the union will not be assessing you - a shorthand for this is a "marking boycott". This has made me realise that next year I must cover pensions in next years' curriculum.

Now, to go back to pensions, they are essentially insurance against getting old. All insurance products share risk among a group of people. Going along that line of pension products, the group that shares the risk steadily shrinks. In the state pension the risk of getting old and not being able to work and therefore needing a pension income is shared among everyone in the country in the past and in the future - an almost infinite number of people. Occupational pensions are often defined benefit schemes - this means we pay into our pension with a guarantee of what income we will get out as a pensioner, which is commonly index-linked; your income will rise with inflation. These share the risk among every single member of the scheme (as employees) in the past and in the future. Therefore the amount employees and employers can pay in might vary over time as the pension scheme has to pay out more money or has increased liabilities (people who might retire in future).

Individual pensions place much more of the risk on individuals. They are defined contribution schemes - you pay in a fixed amount and this in invested for you. The value of your investment can go down as well as up - that is a risk placed on you. When you retire you then have a choice to buy an annuity with your pot which will pay out each year a fixed income that will never change. Actuaries in insurance companies work out how long you are likely to live, compare this to the rest of the people they are paying out pensions too, and work out how much they can afford to pay you without going bust. There is some pooling of risk as with all insurance products, but the risk is much more on the individual than in the state pension or organisational pensions. For example, people retiring right now are finding out that their annuities pay out very little because of the global credit crunch. They did not know the world's economy was going to crash in 2008 when they started paying into their pension 20 years ago. 

What our employers want to do is change our pension to a poorer defined benefit pension for earnings up to c. £40,000 a year (to be technical, care-average-revalued, as opposed to final salary). For earnings over c. £40,000 we will then be forced into a defined contribution scheme. As I described above, this puts the risk on us as individuals, rather than collectively all employee members and employers who are paying into the scheme. Our pensions will be dramatically reduced because of this. However, if we worked for a post-1992 university like Abertay or Edinburgh Napier, we would be in the Teachers' Pension Scheme which is defined benefit. This is while universities are making record incomes from students through the £9,000 tuition fees rUK students have to pay.

Details of the employers' proposals from Universities UK are available here. Details from the University College Union are available here.

We don't take the decision to take industrial action lightly. We all want our students to do their best. But we feel the employers are giving us no choice by forcing a very poor pension on us. We are also concerned that this will affect your education as people will choose to work at post-1992 universities, or elsewhere in the world, where there is a pension scheme. If you are angry that you are not going to be assessed, please contact the students' union and use your routes through to the NUS to put pressure on the employers to negotiate with the UCU.