Pensions powwow set to begin as union offers alternative narrative

The 135,000 members of higher education's largest pension scheme are set to be consulted on plans to phase out final-salary benefits and raise the pension age - with warnings of possible acrimony ahead.

The Universities Superannuation Scheme has announced that formal consultation on the changes, originally proposed by higher education employers, will start on 20 October and run until 22 December.

Earlier this year, Sir Andrew Cubie, the independent chair of the USS' joint negotiating committee, used his casting vote to back the Employers Pensions Forum's proposals for reform rather than rival plans from the University and College Union. The UCU has threatened industrial action if the changes are "forced through".

The £30 billion USS, the UK's second-largest private pension fund, has about 135,000 active members, most of them academics and senior administrators in pre-1992 universities. Legislation sets out "minimum requirements" for the information employers must provide during consultations, but leaves it open for them to offer more if they wish.

Brendan Mulkern, pensions policy manager at the USS, said that the data provided to consultees would take the form of a standard 12-page document detailing the changes. He added that the USS had "worked with the Employers Pensions Forum" to produce the material.

Individuals can use a consultation website to give their views on each of the changes proposed. Mr Mulkern said this would take a "narrative form", rather than a response to set questions or a ballot.

Under pensions law, consultation must be undertaken both with "active" and "prospective" members - the latter being non-members who meet the criteria for membership. Mr Mulkern estimated that about 162,000 people would be consulted.

The proposed changes to the USS include: closing the final-salary scheme to members who join after 1 April 2011; introducing a career-average scheme for those entrants; introducing a normal pension age of 65; and linking pension increases to the consumer prices index rather than the higher retail prices index.

John Hanratty, head of public-sector pensions at law firm Pinsent Masons, said: "There is a possibility that if the consultation procedure is not followed to the letter, staff representatives may cry foul" and demand that the consultation be extended. There is a "strange legal distinction between consultation and agreement", Mr Hanratty added, meaning that the USS and employers are not obliged to change their position in light of mass opposition, but only to show that they have consulted properly.

The UCU has mounted an online "referendum" to gauge support for its plans and those of the employers, claiming that the formal consultation is inadequate.

Employers have argued that the poll is open to repeat voting and votes from individuals ineligible for the USS. The UCU has countered that a system of unique links means that only eligible members can vote, with multiple votes discounted.

john.morgan@tsleducation.com