For Marlowe fans, no, I’m not going to suggest we all go marching courageously. Instead, I’m going to venture into the political arena; specifically, the subject of the current wave of strikes by UCU over changes to pensions for academic staff. Neither am I going to rehearse what the actual changes are or bang the drum vigorously for one side or the other[1]. That’s happened rather a lot all over the internet.
Instead, I’ll talk a bit about where I stand and why we’ve got to this mess in the first place. So, as a PhD student, the strikes put you in a fairly difficult place. On the one hand, you (probably) want to show solidarity with your supervisor, lecturers, etc; certainly if you aspire to an academic career. On the other, whatever the outcome of the current dispute, you can pretty much guarantee that by the time you start paying into any academic pension scheme, it won’t be a Defined Benefit (DB) one, but a Defined Contribution (DC) one[2], so the end result of the dispute will probably not impact you that much, in a sense. You could say it’s academic. No, I’m not apologising for that terrible joke. There’s also the matter of, if you go on strike for pretty much three weeks, you’re probably going to be a bit behind on your PhD work. And if you don’t get your PhD, you certainly won’t have an academic career, and then it really doesn’t matter what the pension scheme is. And, ultimately, the university isn’t paying you for your labour, so the whole concept of withdrawing your labour by going on strike isn’t really applicable anyway – you can’t very well hurt your employer by striking if you don’t, in fact, have an employer. So, yeah, a bit of a grey area.
You might argue that you can show solidarity by avoiding university facilities and just doing your work elsewhere for a few weeks, but what about if you need to visit a library? That’s a university facility, which, in theory, you should be boycotting. Sure, you can probably do a lot of the stuff you need online, but if you’re using the library’s search functions or catalogue, is that not breaking the spirit of the rules, as such? In my case, this isn’t so much of a problem – instead, my problem, which is one that will affect a lot of science students, is that I need my computer[3]. Which is very much non-portable and in a very definite place in a university building. So I really can’t do very much without using university facilities. And, to some extent, isn’t the internet network a university-provided service, so should I avoid that too? I’m mentioning this to illustrate the point – as a PhD student, you’re not really personally involved in the dispute, but you sort of should be, but you can’t really be without jeopardising your own future.
My own personal feeling is that refusing to teach or stand in for striking lecturers is fine and an important show of solidarity, but expecting PhD students not to work on strike days is a bit excessive. Whatever the eventual outcome, we most likely lose, so it would seem the lesser of two evils to not mess up your degree whilst doing so. Other people will hold different views, and that’s fine – I’m just saying how I see things.
So that’s where I stand. But, also, how did we get here? It’s hardly a surprise that there are moves to reduce the academic pension pot – in the private sector, nearly all pensions are DC rather than DB now. So, whatever career you’re in, you’re not going to get as good a pension deal as your parents or grandparents. Sorry. Fundamentally, the cause of this is a demographic transition: put bluntly, there are now too many old people living too long and (relatively) not enough young people working for long enough to pay for them. See also what’s going on with the NHS, which is basically the same problem. When the welfare state and pension schemes were set up postwar, people didn’t tend to live that long after retiring – the average life expectancy in 1951 for men was 66.4; for women 71.5. In 2011, the same figures were 79.0 and 82.8, so your average pensioner is living 10-15 years longer than 60 years ago. The retirement age has also gone up in recent decades, but not by that much – from 60 to a projected 67 for women, and 65 to a projected 67 for men, with a rise to 68 for both sexes for people of my generation. The fertility rate has also declined, so older people make up a larger proportion of the population. So, pensions have to pay out for longer whilst receiving relatively less money from those still working. Unsurprisingly, the result is that pretty much all large pension schemes are in deficit and have had to reduce their generosity to new entrants.
The annoying thing is that all this was entirely foreseeable – this demographic trend has been evident across most of the developed world for the past 50 years. But, it’s a long-term issue, so most governments have tended to stick their heads in the sand and ignore it or only half-heartedly deal with it, meaning that we’ve now reached the point where some schemes are having to implement deep cuts to stay afloat and drastic policy action is needed. But, que sera sera – what could we actually do about it?
To put it mildly, there are no good options. Either you have to reduce the outgoings or increase the inputs. So, you could:
- Kill all the old people. Very unpopular, but would work. On a more serious note, you could achieve a similar effect by suddenly raising the pension age by a decade – that way, you’d pay less out and would also get more contributions from people working longer. This would mainly affect old people and, remember, old people tend to vote Conservative. And the current government is Conservative, so that’s not going to happen. And, to be fair, this would really mess up a lot of people’s lives, but the retirement age really could do with rising faster than it currently is.
- Encourage immigration. Immigrants tend to be young and economically-productive, so are a positive boon for pension schemes. However, this would probably be even more politically unpopular in the current political climate than mass gerontocide, so we can forget about this anytime soon.
- Encourage families to have more children. A longer-term policy, but would shift the population distribution away from the old. However, rather difficult culturally and also hamstrung by a) possible lack of resources (say, houses) and b) the fact that regimes that tend to advocate this sort of policy also tend to advocate, say, invading Poland or marching around in leather uniforms.
- Increase National Insurance and private pension contributions and/or reduce the generosity of existing schemes. Realistically, the most likely to happen, because it shifts the burden from the state to the individual, as the current government is very fond of, and also impacts younger people more. And they won’t vote Conservative anyway, in the main. However, this isn’t exactly free of consequences – doing this effectively leads to more savings[4], which means less disposable income, less spending and consumption and, thus, lower tax revenues. And lower economic growth, which tends to end badly in a capitalist economy. So, everyone loses. Even the OAPs. But sufficiently gradually that you don’t lose the next election and it’s someone else’s problem next decade[5].
So yeah, anyone under the age of 50 is probably not going to get a good pension deal; certainly not compared to the previous generation. And it seems unlikely that any government is going to do anything that might substantially alter that anytime soon. Hooray.
And on that happy note, I should probably stop. Back to lighter material next week.
[1] Though, in fairness, I should probably state that my sympathies lie more with the unions than the management. If you hadn’t guessed that one already.
[2] I’m not going to explain in detail what those mean, because it’s a bit dull and that’s also not the purpose of this post. Suffice to say that they’re the two main divisions of pension schemes and the former is generally better than the latter, but also costs more money.
[3] Replace ‘computer’ with ‘lab’ if that’s more relevant to you.
[4] Either directly, if you increase contributions, or indirectly, if you reduce generosity, because people will be incentivised to save more elsewhere to make up the shortfall in their retirement funds.
[5] OK, so I’m being really rather cynical here, but, still, you’ve got to admit that perennial political myopia is a real problem in any democratic regime.