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REPORTS

Joint Report of the Council and the General Board on arrangements for the early retirement of University officers and University assistants

The COUNCIL and the GENERAL BOARD beg leave to report to the University as follows:

1. In the 1998 Allocations Report (Reporter, 1997-98, p. 678) the Council drew attention (paragraph 8) to a need for the University to make savings on annual expenditure from the Chest. The savings required are estimated at £2.5m a year; this is necessary in order to meet, in part, the cost of the restructuring of academic and academic-related offices to which the Council and the Board are committed. This level of savings will not in itself provide funds for the establishment of new academic offices ahead of the next Research Assessment Exercise, which is to be held in 2001.

2. The Council and the General Board recognize that the University's excellence in research and teaching is built on the efforts of all members of staff. They are determined that that excellence should be sustained (and appropriately rewarded). They therefore hope that wherever possible savings will be made in non-pay expenditure or by transferring Chest expenditure to other sources of funding, e.g. trust funds. Nevertheless the Council and the Board believe that, in order to achieve savings at the required level, some reduction in staff numbers (both University offices and assistant staff posts) is inevitable. They are determined that this should be achieved voluntarily. Accordingly, they now propose the introduction of a scheme for the voluntary early retirement of University officers and assistant staff, as described in the Appendix to this Report. Offers of early retirement under the scheme would be made, on a selective basis, to members of staff aged fifty or over at 31 July 1999; any member of staff wishing to accept such an offer would be required to take early retirement on that date. The Council and the Board are confident that the proposed scheme can facilitate the successful completion of the savings exercise. This will secure the University's future financial strategy and will enable the present pattern of academic activity to be maintained.

3. Under Inland Revenue rules and under the rules of the relevant pensions schemes, staff taking early retirement may be re-employed for specific purposes and for a limited time. The Council and the Board believe that such re-engagement might be attractive both to the individuals concerned and to Heads of institutions seeking to ensure the continued work of their institutions. It is therefore proposed that, subject to Inland Revenue rules, re-engagement should be offered, in cases where the Council or the Board (as appropriate) are satisfied, on the advice of the Faculty Board or the Head of the Department or other institution, that this is necessary on an interim basis to allow the institution to adjust to the retirement of the person concerned. Re-engagement would be for a period of not more than three years, at not more than one-third of the salary or stipend on retirement, and would be the subject of a new contract of employment relating to the specified duties.

4. University officers and members of the assistant staff who wish to take early retirement under the proposed scheme will be invited to apply not later than the division of the Lent Term 1999. Applications will be determined by a joint committee of the central bodies comprising a Chairman appointed by the Council and two other members, one appointed by the General Board and one by the Finance Committee. The joint committee will seek advice from the Head of the applicant's institution, taking account of the following principles, on which each application will be evaluated:

(a) The applicant's early retirement must be in the overall managerial interest of the University.
(b) The institution concerned must be able to maintain its essential activity if the applicant's post is permanently suppressed.
(c) The purpose of the scheme is to achieve a net reduction in expenditure, taking account of the loss of activity which would result from the suppression of the applicant's post.

Each application will be considered on its merits in the light of these principles; if more than one application is received from within the same institution, account will be taken of the need not to endanger the continued viability of the institution's overall activities. Applications will be considered in strict confidence except for consultation with the Head of the applicant's institution.

5. Offers of early retirement will be authorized by the Council or the General Board, as appropriate, by the end of the Lent Term 1999; decisions will be communicated to individual applicants without delay. Offers will remain open for acceptance until the first day of Full Easter Term 1999; as stated in paragraph 2 above, any member of staff accepting such an offer will be required to retire on 31 July 1999.

6. Experience of the last two similar exercises, in 1982 and 1987, suggests that the total estimated cost of this scheme, including re-engagement costs where agreed, is likely to be of the order of £8m. The Council intend that this capital sum should be charged in part to the funds already set aside for restructuring and in part to the Quinquennial Equalization Fund.

7. The information given in this Report and the worked examples in the Appendix are believed to be accurate under the present terms of the Universities Superannuation Scheme and the Contributory Pension Scheme and under current Inland Revenue requirements. Individual members of staff will, however, be advised to seek their own independent advice, and will be responsible for checking the details of their own circumstances in relation to Inland Revenue requirements.

8. The Council and the General Board emphasize that the participation of individuals in the early retirement scheme proposed in this Report is entirely voluntary. Nevertheless they recognize the significance and the sensitivity of the issues under discussion, both for individual members of staff and for Heads of institutions. They will ensure that the General Board Office, the Assistant Staff Office, and the Pensions Office have the resources necessary to provide advice and guidance as required.

9. The Council and the General Board accordingly recommend:

That approval be given to the scheme for the early retirement of University officers and assistant staff set out in the Appendix to this Report and to the arrangements described in this Report for the implementation of the scheme.

26 October 1998

ALEC N. BROERS, Vice-Chancellor D. E. L. JOHNSTON C. T. MORLEY
T. S. ADKINS ALIX LANGLEY ONORA O'NEILL
MARTIN BOBROW JOHN A. LEAKE M. SCHOFIELD
A. L. R. FINDLAY HOLLY LINKLATER DAVID M. THOMPSON
DAVID HARRISON A. M. LONSDALE JOAN M. WHITEHEAD
B. A. HEPPLE

21 October 1998

ALEC N. BROERS, Vice-Chancellor JOHN A. LEAKE A. C. MINSON
JOHN E. CARROLL PETER LIPTON MICHAEL PEPPER
D. A. GOOD N. J. MACKINTOSH ADRIAN POOLE
D. E. L. JOHNSTON D. H. MELLOR K. B. PRETTY

APPENDIX
EARLY RETIREMENT SCHEME

The scheme will be open to established staff in all grades, both University officers and members of the assistant staff, who are aged 50 or over on 31 July 1999.

University officers

University officers will be eligible to receive the following benefits under the scheme:

Assistant staff

Members of the assistant staff will be eligible to receive the following benefits under the scheme:

Examples

University officers

An officer retires on 31 July 1999 aged 57 years and 0 months, with 29 years and 6 months pensionable service both with the University and in USS (and previously in FSSU). The officer's Final Pensionable Salary on retirement is £31,010.

Pension benefits

This officer will be entitled to an additional service credit of 8 years in USS to give the service that he or she would have had at age 65.

(Service 37.5 years × Final Pensionable Salary of £31,010) divided by 80
= £14,536 a year, together with a lump sum of £43,608.

The entitlement at 31 July 1999 under normal USS rules would be:

(Service 29.5 years × Final Pensionable Salary of £31,010) divided by 80
= £11,435 a year, together with a lump sum of £34,305.

Compensation payment

(a) A lump sum in respect of the additional pension benefit which would have accrued between the officer's sixty-fifth birthday (31 July 2007) and his or her normal University retirement date (30 September 2009).

(Service 2.1667 years × Final Pensionable Salary of £31,010) divided by 80
= £840 a year. This figure is converted to a lump sum using a factor of 10; this gives a lump sum of £840 × 10 = £8,400.

(b) A lump sum equal to three times the pension in (a) above = £2,520.

The total lump sum payable in respect of (a) and (b) above is £10,920.

Assistant staff

An Assistant retires on 31 July 1999 aged 57 years and 0 months, with 29 years and 6 months pensionable service both with the University and in the Contributory Pension Scheme. The Final Pensionable Salary on retirement is £14,956.

Pension benefits

This Assistant will be entitled to an additional service credit of 8 years in the Contributory Pension Scheme to give the service that he or she would have had at age 65. The pension payable will be:

(Service 37.5 years × Final Pensionable Salary £14,956) divided by 60
= £9,348 a year.


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Cambridge University Reporter, 28 October 1998
Copyright © 1998 The Chancellor, Masters and Scholars of the University of Cambridge.