(Bloomberg) -- British university staff walked off the job in protest against demands that they contribute more to retirement funds that are being decimated by shrinking bond yields.
Academics and other staff at some 60 institutions began eight days of industrial action on Monday, according to a statement from the University and College Union. It’s the second pension-related university strike in two years and will affect more than a million students.
The cost of servicing retirement plans that link payouts to salary levels has exploded in Europe and the U.S. since bond yields evaporated in the wake of the global financial crisis. Expectations of lower returns have pushed up the cost to meet future liabilities and that’s increasingly spurring calls for employees to chip in more to maintain their benefits.
Higher-education staff across the U.K. were asked to hike regular payments into the 73 billion-pound ($94 billion) Universities Superannuation Scheme, the country’s largest private-sector pension fund and one of a handful of so-called defined benefit plans to remain open to new members. While that’s the strikers’ main complaint, others include compensation and working conditions.
Negotiations between UCU and Universities U.K., the body representing higher-education institutions in the pension talks, were held last week without result. The union argued that the cost of lifting monthly contributions by several percentage points should be borne by employers. The universities retort that the burden would impact investment and hiring in other areas.
The risk to promised retirement payouts has become so great that in the Netherlands, for example, there aren’t likely to be any such plans a decade from now, Theo Langejan, a special adviser to the board of the Federation of the Dutch Pension Funds, told a U.K. pensions conference in October.
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