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Michael Otsuka @MikeOtsuka
, 21 tweets, 6 min read Read on Twitter
As I mention in this linked thread, @ucu's policy regarding #USS will be determined in a conference in Manchester tomorrow. There I comment on a number of motions. Below, I detail my reservations over Motion 5 in particular. 1/
Here is the action called for by Motion 5 (which was proposed by @leedsucu): 2/
I explain in this linked blog post, and those to which it links, why I oppose clause a and won't say anything further here about it. 3/
medium.com/@mikeotsuka/wh…
Re clause b involving the restoration of the 1% match: elimination of the 1% match reduces employer contributions by 0.8%. 4/
Putting that 0.8% to the preservation of the DB status quo would be a far more effective use of that 0.8%, by my lights. That is what JEP's proposed modelled solution does. 5/
JEP's proposed modelled solution already involves 20.1% employer contributions. A 20% employer contribution is already pretty high. Do we really want to expend effort to push it up further, or else make the case for employers taking on more investment risk... 6/
...just to preserve the option of the match of a voluntary contribution into IDC pension pots (whose uptake by members has been low, thus far)? Let's make use of the 0.8% to strengthen existing DB and forget about the IDC match. 7/
This brings us to clause c: "the Defined Contributions threshold (£55,550 in 2017/18) to be increased to spine point 49 of the nationally agreed framework salary scale (£56,950 in 2017/18) and to increase each year in line with pay for that spine point." 8/
The DB/DC salary threshold is currently tied to increases in the CPI inflation index. These increases are automatic, depending on the September to September annual increase in CPI. (If there is a decrease, the salary threshold remains unchanged rather than going down.) 9/
The DB/DC threshold went up by 3% in April 2018, from £55,550 to £57,216.50. This is because the Sept 2016-17 rise in CPI was 3%. 3% is higher than any annual pay settlement that @ucu has been able to negotiate during the past decade. 10/
Moreover, only once during the past 20 years has @ucu (or its AUT predecessor) secured an annual pay settlement above 3.5%. That was when pay went up by 5% in Oct 2008, in the third of a three-year settlement. 11/
It went up by 5%, not because employers explicitly agreed to raise it by 5%. Rather, it was because employers agreed that it would go up by RPI as of Sept 2008. RPI spiked to 5% that month, before plummeting into negative numbers on account of the global financial crisis. 12/
Lesson: tying salary increases to an inflation index will yield greater gains than employers will ever explicitly agree to. 13/
Moreover, increases in points on the pay spine have failed to keep pace with CPI during the past 10 years, as indicated by the downward slope of the red line in this graph: 14/
Tuition fees are now frozen in nominal terms and therefore declining in real terms. Govt spending on higher education is otherwise losing out to the NHS, schools, & other spending priorities. Visas for foreign students are being restricted. Brexit will reduce economic growth. 15/
👆Upshot: We can anticipate much less of an increase in income for higher education going forward than during the past decade, when universities received a boost from the introduction of £9k tuition fees. Real terms declines in income are most likely. 16/
Given the likelihood of such real terms decline, I would have much more faith in automatic rises in the DB/DC salary threshold, as pegged to CPI, than in rises that correspond to any pay settlements @ucu is able to negotiate with UCEA. 17/
In fact, we'd be better off pegging increases in the pay spine to the CPI index, rather than de-linking the rise in the DB/DC threshold from the CPI index and pegging it to the negotiated pay spine. 18/
When it comes to the pay spine, @ucu should seek a long-term commitment to the pegging of such increases to an inflation index which properly reflects increases in the cost of living for university staff. 19/
The existing index which best reflects this is RPIJ (not RPI, which is statistically flawed). The government will eventually introduce a better HCI (household cost index) measure of inflation. See linked thread. 20/20
UPDATE: It turns out that the motion that Leeds actually submitted to conference doesn't contain the proposal to link the salary threshold to point 49. See here:
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