My gold-plated pension scheme?
It's funny how the meanings of words can chance so quickly. I always thought that "gold-plated" pensions were a great idea. Only a few years ago they were about ensuring that people who had worked hard for nigh on half a century could live comfortably when they retired; they were the end of old-age poverty . . . and indeed were probably cheap at the price, given the expense to the nation (in terms of the NHS, social services etc) of the elderly slipping to the bottom of the deprivation pile.
Now the phrase conjures up an image of a load of geriatric fat-cats, passing their retirements in the lap of luxury, at (horrible phrase) "the tax-payer's expense" -- while the toiling masses labour on low pay to keep them in this privileged condition.
Many people would say that I had a pretty gold-plated pension (paying out up to half my annual salary, based on the average of what I earned in my final three years, and index linked to the RPI). But it isnt at the tax-payer's expense... the Universities Superannuation Scheme is a company, and it is funded by the contributions of both employees and employers.
Gold-plated until now, that is. Because in view of what is believed to be the unsustainability of the scheme at its current levels of benefits (for all the usual reasons). The proposals include moving to a Career Average basis of pension calculation (that is what you get is based on your mean salary throughout your whole career...."mean" in mathematical sense, that is), and the index-linking will move from the Retail Price Index to the Consumer Price Index (which is traditionally lower) -- and anyway even that is capped at 5% per annum. Calculations show that this could amount to very significant losses (for example, if you lived 20 years in a period of high inflation, your annual pension at aged 85 would be worth less than 20% of your final salary). There are more examples given here in an excellent paper by Susan Cooper and Stephen Cowley.
There is a good deal of anger amongst us employees about this. Not because anyone thinks that no changes should be made. But because we have simply not been consulted as we should have been, and the different options (with supporting arguments have not been laid out). We're just having one way forward forced upon us.
For my own part, I would like to see what it would cost to keep the benefits roughly as they are. How much more would I have to pay (many of us would pay a very great deal more to protect our pensions)? And how much more could, or would, the employers contribute to the pot? Ironically, in the apparent stability of the late 1990s, the employers actually reduced their contribution to the scheme. Why not put that back up to its traditional levels?
To be fair to the Univesity of Cambridge, they have tried to get the information we want out of the managers of the scheme. But without much success. So there is now to be a ballot of the Regent House here in Cambridge (that's "the don's parliament") asking the university to demand to see the information on the alternatives from USS, and to conduct a ballot.
One of the things that is bothering me is the Career Average idea. I know what the arguments in favour are: why should people who have a big salary hike at the end of their career benefit from that for ever? But isnt there also a gender point? In Cambridge, and many other universities I think, women -- as a group -- are promoted later than men. Even those who do get to the top salary grades, get there later than their male colleagues (why? we dont really know, but babies, domestic responsibilities and a dash of institutional sexism must all play some part..). A Final Salary scheme compensates for that. A Career Average scheme will make them the economic victims of that slower salary progression for their whole lives, right through their retirement.
These are the kind of things that we want to have a chance to discuss properly.