A package of pension reforms for the Universities Superannuation Scheme, London, was approved Tuesday by a joint negotiating committee.
The changes include higher contribution levels and slightly reduced accrual rates that were recommended after a 2020 plan valuation showed a sizable deficit, which has since shrunk.
The trustee for the £89.3 billion ($121 billion) pension fund must submit the reforms for regulatory approval before the changes can become effective April 1, 2022.
The changes call for contributions of 9.8% of salary for participants and 21.6% of salary for employers, an increase of 0.2% and 0.5%, respectively.
Plan participants earning up to £40,000 per year will see a lower accrual rate, and those making more than £40,000 will receive a 20% employer contribution into a defined contribution plan.
Participants' concerns about a 2.5% cap on inflationary increases led employers to agree to contribute an additional 0.2% of salary until the next valuation, possibly longer depending on the size of the USS deficit.
A spokesman for Universities U.K., which represents all 340 USS contributing employers, called the committee action an affordable solution that "provides a more sustainable platform on which the scheme's longer-term future can be built." Without the reforms, "costs would have risen to unaffordable levels for employers, while the increased costs for members would have seen more people leave the scheme and miss out on a valuable employer contribution towards their retirement," the spokesman said in a statement.
"Our focus can now return to working collaboratively on alternative scheme designs, a review of the scheme's governance, and developing lower-cost options and flexibility to give members more choice in their retirement saving."
The union representing university workers saw it differently. University and College Union already started a limited strike Feb. 14, arguing that the USS deficit has been reduced enough since the 2020 valuation to justify lesser measures. Jo Grady, the UCU's general secretary, said in a statement Tuesday that the dispute is "far from over."
The union will meet Friday to consider further labor actions.
According to the union, a typical university lecturer will lose at least 35% in pension benefits due to the changes.
