Should students support the strikes?
Universities are part of society. They don’t sit above society, nor do they transcend society. Problems in universities are de facto social problems. Lecturers, students, non-academic staff, and management are, in addition to being these, members of society. In society, it is often the case that people unaffected by a problem join in the fight against a problem. No one I know believes people shouldn’t be able to do that. That is why not only members of the BME community fight racism; not only women fight misogyny; not only Jewish people fight anti-Semitism; not only the poor fight poverty, etc.
The rationale of the question “should students support the UCU strike?” seems to me to be that only those affected by a social problem should fight it. In other words, why should students be bothered? In a debate such as this, I might be expected to answer by talking about how the pension changes will affect students. I will, however, avoid doing that explicitly (although there are undoubtedly myriad ways that it would). A thing is not wrong because it affects me. If it’s wrong, it’s wrong that it affects anybody at all. Pension cuts and the resulting pensioner insecurity are social problems and anyone who feels the need to help lecturers fight them should, and does have the right to do so.
It is not at all surprising that a majority of students (61% of students nationwide, according to a YouGov poll) are outraged by the recent decision to upend the USS pension scheme, placing at risk the pension savings of academic staff. It is important to keep in mind that the pensions in question are not a form of benefits. That is, this is not a case of lecturers fighting to keep something they hitherto received solely on account of the government’s beneficence. These pensions are part of the salary they have justly earned during their working lives, put away for them for when they retire.
Under the new system, a lecturer could potentially be thousands of Pounds worse off in retirement than they would be under the system that existed. Let’s put this in perspective. According to Times Higher Education, ‘a lecturer starting on a salary of just under £40,000 a year who moves up the pay spine to £47,722 and works for 30 years would currently receive an annual pension of £15,400 in retirement…. Under the UUK plans to switch to a defined contribution scheme – in which pension payouts depend solely on stock market performance – that individual would get a pension of just £9,400 a year. That is £6,000 (39 percent) less than under the current system.’ In a country where 1.9 million pensioners (16%), who’ve worked their whole lives, live in poverty, this is just plain callous and unconscionable. And it is to the credit of that 61% of students who support the strike that they do.
Finally, there is no doubt in my mind that after the crash of 2008/09, and the historical inequalities created and sustained by the so-called free market system, society should now, as a general rule, be moving away from it at every opportunity. Preachers of the free market gospel always boast that the free market supposedly lifted billions out of poverty. There are three problems with that boast: (1) that two things happen concurrently doesn’t mean there is a causal relationship between them; (2) even if the free market pulled people out of poverty, the point of capitalism was never that the poor shouldn’t die in the streets, but that each should get their due – the CEO doesn’t work 120x harder and isn’t 120x smarter than the bottom earner; and (3) in the non-fictional world we live in, previous family wealth, race, gender, arbitrarily ascribed value (doctors vs. footballers) and a willingness to bend or break the rules are much better predictors of outcome than talent and hard work which the free market is supposed to ride on – which is not to say that it would necessarily be good if outcomes were based on talent and/or hard work. As a result, it is incredibly shocking that the UUK would choose to take a further plunge into the market system with lecturer pensions. Students, as conscientious citizens, are right to oppose it.
Delving into this subject has led me to believe that to fully understand this issue, you need a PHD in economics and 10 years’ experience on the stock exchange. Neither of these things describe me, and so I have had to tread through this economic data carefully. We must first look into the claims made by Universities UK (UUK), the institution in charge of making changes to the USS.
They claim that the USS is running a deficit of £17.5 billion (meaning that the money they have is roughly £17.5 billion less than the money they have promised to be able to pay). It’s alright for pension schemes to run small deficits, because clever investments can be made to correct for such things. But a deficit of £17.5 billion is catastrophically troubling. Keeping the current scheme means one of three things: either the employee/employer contribution rate will have to be raised from 26% to 33% of the lecturers’ salaries (which means less money for lecturers and less money for universities), retiring lecturers will not receive the pensions they have been promised, or universities will need to fire armies of professors (while probably also raising tuition fees in all three cases).
While the 17.5 billion figure is the worst case estimate, the kinder alternative put forward by the USS itself of £12.6 billion is no picnic either. The trend has been going one way: the USS has been steadily downgrading its liabilities (pension promises) over the past few years, all to the chorus of industrial action from the lecturers. While they have been doing this, however, they have also been making some genius investments. The 2016/17 year was a great one for USS. Due to rewards seen from getting the right people on board (Roger Gray, a well-respected, award-winning investor, has done great things in the last couple of years), the USS saw a return of 21% in the 12 months leading up to March 2017. This adds up to £1.1 billion profit over a 5-year period. For any normal scheme or business, this would be wonderful news and champagne corks would be whizzing past many an ear.
But this is not a normal scheme. It is in fact a desperately doomed, historically mismanaged scheme that is fast running out of ideas. Pension schemes need to make profits on investments in order to keep up with inflation, otherwise the money you paid into your scheme in 1989 would be half as valuable when you take it out in 2018. But currently USS is having to make genius investments just in order to deal with its vast, and growing, deficit. Even this is not enough. The same months in which the USS made 21% returns on its portfolio, it’s liabilities increased by 33%! Some of this discrepancy can be explained, according to Roger Gray, by Britain’s decision to leave the European Union, which has had some effect on investments. The troubling aspect is that with liabilities rising at this speed, the scheme has to invest in increasingly risky areas such as equities (dubbed ‘casino gambling’ by those skeptical of the USS’s recent management). Risk is sometimes necessary, but it is of course problematic, as retirees could lose money due to bad investments. It would all be worth it, though, if returns were enough to keep the deficit at bay. But that is impossible.
I strongly believe that the UCU’s wish to maintain the defined-benefit aspects of this scheme is fatally problematic, and will have terrible consequences for lecturers both now and in the future. While I don’t think the strikes will come to anything, the strikers are risking their financial futures based on economic arguments which are far from settled. Perhaps the lecturers will have to give up their wonderful, civil-servant-esque pensions in exchange for more modest ones. Unless you have the qualities mentioned at the beginning of this article, and know for certain that one or the other side of this economic debate is correct (which I’m not saying for one moment I do), my advice is to stay out of a situation in which the financial futures of other people are put at risk, and not to support these strikes.