This document is designed to help clarify information involved in discussions about your pay and pension.

This is not pensions or financial advice.  If you want specific pensions advice, contact your pension provider or a financial advisor (please note, as a UCU member you benefit from the union’s relationship with a ‘preferred financial services partner’ offering free initial financial advice: https://www.ucu.org.uk/quilterfinancialadvice). There is also helpful information for members on the UCU website https://www.ucu.org.uk/pensions.

• What is your pension?

Your occupational (workplace) pension is deferred pay, that is, money you have earned put aside for when you stop working: “A percentage of your pay is put into the pension scheme automatically every payday” (https://www.gov.uk/workplace-pensions).  All employers must provide a workplace pension scheme. This is called ‘automatic enrolment’. Your employer cannot unfairly dismiss or discriminate against you for being in a workplace pension scheme, or encourage or force you to opt out.

• What is TPS?

‘TPS’ is the Teachers’ Pension Scheme.  You pay into it and so does your employer. TPS is run on behalf of, and underwritten by, the government.  This means there is no ‘pension pot’ and it cannot go ‘bust’.  TPS is the occupational pension scheme for the many thousands of teachers, lecturers, and academics in the UK and Northern Ireland, in schools, further education, and participating higher education institutions (see the info on the website about eligibility).  Post-92 universities like Northumbria (institutions given university status through the Further and Higher Education Act 1992) must offer TPS.  This is a statutory requirement.

TPS is about as good as it gets for pensions now. As the National Education Union say: “The Teachers’ Pension Scheme is extremely valuable” (https://neu.org.uk/advice/your-rights-work/pensions/teachers-pension-scheme), and the government say the benefits offered by TPS are “among the best available” (https://consult.education.gov.uk/teachers-pension-scheme-team/the-teachers-pension-scheme-amendment-regulation24/supporting_documents/Teachers%20pension%20scheme%20miscellaneous%20regulations%20consultation.pdf).  

TPS is a ‘defined benefit’ (DB) pension scheme, that is a pension based on how much you earn and how long you’ve worked for your employer. It is a fixed sum of money that is paid out from your former employer's pension scheme when you retire. It will give you a guaranteed income for the rest of your life, however long you live.

The government introduced major reforms to TPS in April 2015. Most people were transferred from a final salary to a career average pension, and new entrants joined the career average scheme. If eligible, you can also pay Additional Voluntary Contributions (AVCs) to build up additional retirement funds: https://www.teacherspensions.co.uk/members/faqs/working-life/additional-voluntary-contributions.aspx. 

A final salary scheme is calculated based on your final average salary, multiplied by your length of service, multiplied by the appropriate accrual rate. The accrual rate is dependent on the section of the final salary scheme: Normal Pension Age = 60: Accrual rate is 1/80^th with an automatic lump sum of 3/80^th, Normal Pension Age = 65: Accrual rate is 1/60^th (no automatic lump sum). The average salary used for final salary benefits is the better of the final average salary over your last year of work, or an average of the best three years (re-valued) from the last ten years. In a career average scheme, your pension is based on your salary over the whole of your career.

If you are in TPS, your career average benefits are based on 1/57^th of your pensionable earnings each year plus index linking (and an additional 1.6% whilst you are an active member of the scheme). This amount is banked each year with your eventual pension made up of all the amounts that have been banked each year.

Following a ruling in an age discrimination case (known as the McCloud judgement), everyone in TPS has now been moved into the career average scheme as of 1 April 2022. Members eligible for the remedy will choose between final salary or career average scheme benefits for the period April 2015 to March 2022 – effectively getting the better of the two schemes.

In April 2024, TPS employer contributions rose by 5% to 28.68%, partly to pay for the cost of the historical age discrimination addressed by the McCloud judgement, but mostly due to the way in which the Treasury determine the valuation of the scheme.  The Department for Education provided additional funding for state schools to cover this, but not universities or independent, non-state schools.

• What is USS?

USS is the Universities Superannuation Scheme.  This is the largest private pension scheme in the country in terms of assets under management, and the principal pension scheme for most non-Post-92 universities (such as those in the so-called ‘Russell Group’). 

Unlike TPS, the value of USS depends on the value of the investments it makes, and that value is not underwritten by the government. Unlike TPS, USS is a ‘hybrid’ pension that combines a ‘defined benefit’ component with a ‘defined contribution’ (DC) element. The ‘defined benefit’ part provides a guaranteed income while the ‘defined contribution’ part is invested in a range of funds. If you earn above the salary threshold, you automatically start paying into the ‘defined contribution’ part of USS. A DC pension arrangement is a savings pot based on how much you (and your employer) put into it. The money in your pot is invested and the value of your pot can go up or down – it all depends on how the scheme’s investments perform.  Unlike TPS, Post-92 employers like Northumbria University do not have to offer USS, though some Northumbria colleagues are in USS, having been in it when working at other institutions. You can learn more about USS here: https://www.uss.co.uk/for-members/your-pension-explained/how-your-pension-works.

Up to 2015, USS was final salary; since then it has been career average for pensionable income under a certain amount. In recent years, when USS has been devalued, UCU members who are in USS institutions have taken lots of (ultimately successful) industrial action to restore the value of their pensions (https://www.ucu.org.uk/article/13215/Agreement-paves-way-for-full-restoration-of-university-pension-benefits-by-April).

 

• Can a Post-92 university like Northumbria stop offering TPS?

No, as it is a statutory requirement for eligible staff to have access to TPS in Post 92s.  Because TPS is such a good pension, the National Education Union strongly oppose this any schools stopping offering TPS (https://neu.org.uk/advice/member-groups/independent-sector/protecting-pensions). UCU are aware that some Post-92 university managers have started to discuss ways to provide ‘alternatives’ to TPS, or mitigating the costs to employers (https://www.hepi.ac.uk/2025/01/06/universities-and-the-teachers-pension-scheme-the-time-for-change-is-now/).  UCU strongly oppose any moves employers might make such as employing staff through subsidiaries, or withdrawing from national pay bargaining.

• What is the problem with getting pay and pension via a subsidiary company?

If a Post-92 university set up a subsidiary company to employ people and pay their pensions, this could only be for new staff (because existing staff are in TPS or USS and it would cost too much to move their pension over to another scheme). Any benefits to the employer in terms of reducing their pension contributions would therefore take a long time to have any effect.  Equally, there is no clarity about whether staff employed via a subsidiary would be eligible for the REF – a risk to the employer and employee alike.  

Moreover, without additional costs to the employer, it would be difficult for an independent,  private, for-profit pension via a subsidiary company to be attractive to employees: the value of your pension would depend on how well the funds were managed, your pension would be paying for those managing it (and their profits), you’d have little control over investments, and small funds are subject to greater risks without the same protections as TPS. Very few universities have offered pay and pensions via subsidiary companies to academic staff for these reasons.  They offer no competitive advantage.  Instead, they create a two-tier workforce where it seems job security for all depends on worse conditions for some.

 

• What is national pay bargaining?

The Universities and Colleges Employers Association (UCEA) conducts national collective pay negotiations with the five higher education trade unions - UCU, UNISON, Unite, EIS and GMB - on behalf of the vast majority of universities. This is done through the Joint Negotiating Committee for Higher Education Staff (JNCHES). UCEA member institutions decide individually whether they will participate in each negotiating round to address the uplift to be applied to the national pay spine, covering their employees below Professor and equivalent. Negotiations take place annually, between March and May.  The pay settlement is then imposed or rolled out (though some institutions do this sooner).

In recent years, because of UCEA’s recalcitrance and the unequal distribution of resources in a marketized sector, these negotiations have resulted in a series of terrible, single-year, below-inflation pay offers from UCEA.  Since pension is deferred pay, lower pay rises mean lower pay now and in retirement. As the DfE point out, the TPS deficit has arisen “primarily because of the member contribution tier thresholds increasing at a higher rate (based on CPI) than average salary growth” (https://consult.education.gov.uk/teachers-pension-scheme-team/the-teachers-pension-scheme-amendment-regulation24/supporting_documents/Teachers%20pension%20scheme%20miscellaneous%20regulations%20consultation.pdf )  

 

• What happens if a university pulls out of national bargaining?

Any individual university employer can choose to leave national pay bargaining unilaterally at any point (i.e. without agreement from UCU nationally or locally). However, any subsequent local pay settlements would still have to be negotiated with an employer’s local UCU branch, and with any other trade unions recognised by the employer.

Some universities have pulled out of national bargaining, but in those negotiations have either matched or bettered the national offer in doing so: there is no cost saving.  The only way pulling out of national bargaining makes things more cost-effective for employers is if they reduce pay (to reduce the cost of pension contributions), but this comes with other risks.

To do locally what currently happens nationally would demand significant time and resources, from institutions and their trade unions, and a mechanism for resolving disputes.  Because, of course, local negotiations which would have to involve UCU would affect everyone – and who wouldn't want a say in that?  Your pay would be a result of what your branch is able to achieve for, and with, you. “Have your say on pay – join UCU today!”