The current dispute in UK universities over the future of the pension system for University staff has been the occasion for much solidarity and comradeship – publicly on picket lines, through teach-outs and on social media, and I suspect also more private, care-full channels of support and encouragement. The phrase a ‘teachable moment’ has been heard often enough over the last couple of weeks, although I’m coming to think of all this as a ‘learnable moment – for example, an awful lot of us know a lot more about pension financing and asset pricing and investment and projected life-expectancy, and the mendacity of our employers, than we did a week or so ago. Because that what academics tend to do when they are on strike – they read and research into the things animating their grievances; they think for themselves. Who knew?
All this learning has been facilitated by shared Facebook posts and tweeted links and blogposts, as well as real conversations and events (presumably). And, you know, it’s amazing what you can learn on Google. Part of me is embarrassed to admit to not knowing more about all of this before (but I used to be young and carefree about old age). Then again, the reason it has been so engrossing to learn more about the background to this dispute is precisely because what one is learning is that one’s trust in the good faith of Universities to protect the best interests of their staff that underwrote that ignorance turns out to have been rather ill-placed.
To say the least. My colleague Gail Davies has been tweeting her analysis of the role of the investment consultant Aon Hewitt in shaping the strategy of UUK – ‘The Voice of Universities’ – to redesign University pension system not just in the last year but for some time longer than that. You should have a look at Gail’s thread on all this. And then look at the thread by Felicity Callard that picks up the story, and then Shaun French, and follow where it all leads (it’s not pretty).
There are all sorts of issues raised by the digging that Gail and Felicity and Shaun and others have been doing. Apart from anything else, the capacity of Twitter to serve as a genuine space of intellectual enlightenment, but also perhaps the limits of that (it can be difficult to keep track of the narrative arc emerging almost in real time as we all discover what a deep hole we have been dug into by our employers). But also some proper ‘theoretical’ ones of very immediate relevance: what Gail and Felicity have found, as a matter of public record, is that UUK and Universities have been complicit in a motivated effort not just to adjust to a ‘shifting landscape’ of pension economics but to help instigate a shift away from collective pooling of risk by Universities to benefit their staff through supporting a pension system to relocate all the risk onto staff by instigating individual savings plans (remember, we now all know that “a DC is not a pension at all“). It turns out the Universities we work for stand as very good examples of the efforts to deliberately enact market practices in new ways that academics themselves have analysed. These and other issues no doubt deserve much more attention – much broader attention is perhaps the better way of putting it – beyond the confines of this particular dispute.
One thing I have learnt, for example, is that reform of the USS pension system actually serves as a live empirical experiment for economists researching the unequal redistributory effects of pension scheme redesign. Financial economists have used the 2011 rule change, when USS closed its final salary scheme to new members, to assess the redistributory effects of rule changes to pensions systems (2011 is also when the national government withdrew from underwriting the USS system, thereby transforming the level of risk to which this system is technically exposed, a central issue in the current dispute). To cut a long story short, they find that this rule change involved a redistribution of wealth from ‘members’ to ‘sponsors’ (that is, from University staff to Universities); and that the costs of this redistribution fall unequally on younger/newer members. Here’s part of the summary of their findings: “The rule change in October 2011 resulted in the transfer of about £32.5 billion of wealth from the members to the sponsor during the 2011-2015 period. This is the equivalent of about £600 million per year, or over 60% of the sponsor’s contribution in 2011 of £938.4 million.” Let that sink in for a moment – and think about it next time you wander past a shiny new building on the campus where you work.
In a rather understated conclusion, the authors helpfully remind us “Since pensions are deferred pay, this represents a substantial pay cut”. And that was back in 2011!
Now, this all comes from a published academic research paper, using robust methods of data analysis (you know, that middle bit of papers that we all mostly skip over, where people show their workings), which addresses a more general issue of scientific significance in its own field, and, oh, remember, would have been through a thorough process of peer-review. You know, the sort of social science knowledge that Universities are rather reluctant to allow entry into their own forms of strategising. I wonder why?