1. Distort or misrepresent UCU’s claims
a) START BIG – this is counter-intuitive but it works. Take the UCU/First Actuarial pension modeller finding that a typical member would suffer a 35% cut to guaranteed retirement benefits, remove all context, and falsely claim that this is the union’s estimate of the whole loss.
The University of Manchester shows us how it’s done in an email to staff: ‘the UCU has decided to ballot its members as it believes staff in the scheme are facing a cut in their final pension of up to 35%’.
Make 35% your headline, so you can talk up a big gap between this estimate of the cut and the (equally spun, but we’ll come to that later) cut you are actually going to impose. Keep the following information well away from the headlines: UCU’s calculations estimate a 20–25% overall cut to pensions once the non-guaranteed, defined contribution lump sum payment is included (presuming that investments perform as well as expected).
b) Or dispense with nuance and simply lie about the union’s claims
The ‘USS Employers’ organisation are your model here, falsely claiming that UCU has not taken into account the defined contribution element of the scheme.
You’ll just have to hope that no one notices that the difference between the cut to guaranteed and estimated total retirement benefits is very clearly explained on the UCU website.
2. Assume that your employees know exactly how many years they’ll live for
You rightly expect high performance from your world-leading staff, so why not presume that they can predict the future? That (non-guaranteed, investment-dependent) defined contribution lump sum is theirs on retirement to spend as they please, but not spend too fast: it might run out! So, VCs—you should assume that it’s spent at a very prudent rate, say 3.5% per year. But you should also make sure that this assumed rate is higher than the rate of return on this money when converted to a guaranteed annual income, though this would be a far wiser option for many people. Your staff are amazing—they can combine prudence with high rewards in a way that no professional fund managers can match! With all your staff able to predict to the year exactly how long their retirements should be, they won’t need to buy any annuities: they know, somehow, that the payment which finally cleans out their lump sum will be to the undertakers. Don’t tell the entire pensions industry that your staff can manage without them, or they will cry.
Again, you’ll have to hope that no one uses USS’s own annuity calculator, handily linked on the UCU website, to find out what their predicted lump sum is much more likely to yield (an annual income equivalent to just 2.8% of the lump sum for one of this blog’s authors). Or that no one checks the small print on these USS ‘model member’ examples:
Investment Builder savings are turned into income using an assumed withdrawal rate of 3.5% per annum. There is always a risk that the Investment Builder funds could be exhausted before a member passes away.
Don’t let them click on those links! Cross your fingers, send out a few more all-staff emails about wellbeing and resilience, give someone a prize, open a new building etc, and maybe your staff will be too distracted to click on the UCU site before it’s too late and the ballot is closed.
3. Pick and choose the numbers
You already know this one, and with USS it’s easily done. Even ignoring the difference between guaranteed and non-guaranteed benefits, and even with your crystal-ball-gazing ‘drawdown’ income assumption, some of your staff still appear to be facing a cut of 18% to their retirement income. But staff nearer to retirement, who have already built up guaranteed benefits, won’t be quite so badly affected. So talk about them. There’s no need to mention the specific circumstances behind the 10% part of your ‘10–18%’ estimate for the total cuts. That nice lower number at the start makes the whole thing look so much better.
4. Reach for a government bail out
But you’re an ambitious, go-ahead VC—and you’re shooting for single figures. For this, you need to include the state pension in the final retirement income. As the University of Manchester (yes, them again) comments in a message to staff: ’reduction in annual pension is likely to be between 10% and 18% (or 7%–15% if a full state pension is factored in)’. USS Employers can give you the raw numbers (scroll down to note 3).
It’s absolutely fine to rely on the public purse to disguise your cuts in deferred salary. It just looks and feels a bit like corporate welfare. Remember to base your calculations for state pension levels on the government respecting the ‘triple lock’ guarantee for the next few decades… even though a few months ago they reneged on that one also. Luckily for you, small print isn’t easy to read when you’re exhausted: another useful knock-on effect from the workload crisis.
5. Give yourself a pay rise
You’ve done it! 35% to 7% in just four easy doses of sophistry. 7% isn’t so bad: you wouldn’t notice it yourself, not on the money you’re getting. So all’s well, and there’s no need for anyone to fear for their dignity or well-being after years of service to higher education.
Of course, all sides in a dispute try to present their strongest possible argument. But this post is an invitation to compare UCU’s FAQs with various statements by employers which, we believe, present a misleading picture of likely actual retirement benefits. We hope that it is helpful to anyone who finds it difficult to see at first glance how the different numbers have been produced.