The University of Chichester has sparked outrage among staff and unions by announcing that all new employees will be hired through a newly created subsidiary company, effectively barring them from industry-standard defined benefit pension schemes. This move, effective from April 15, 2026, for staff joining after April 1, 2026, has been branded as creating a 'two-tier workforce' by the University and College Union (UCU), with existing employees retaining access to generous Local Government Pension Scheme (LGPS) or Teachers' Pension Scheme (TPS) benefits while newcomers are shunted into a less secure defined contribution plan.
The decision reflects mounting financial pressures on UK higher education institutions, particularly post-1992 universities like Chichester, which are statutorily required to offer TPS to academic staff and LGPS to professional services personnel. These schemes provide guaranteed retirement income based on final salary and years of service, but employer contribution rates have soared to 28.68 percent for TPS, far exceeding typical defined contribution rates of around 8-14 percent. By routing new hires through Chichester Staff Services Limited—a company incorporated in August 2025 and wholly owned by the university—the institution aims to sidestep these obligations and control costs.
UCU's Chichester branch has vowed resistance, stating that members will convene soon to discuss action, including a potential strike ballot. General Secretary Jo Grady condemned the university for lacking meaningful consultation and using a 'sham company' to undermine national agreements, warning that new staff could be 'many thousands of pounds per year worse off' in retirement. The union highlights that the Aviva FlexHE scheme offered to newcomers lacks the security of defined benefit plans, exposing workers to market volatility and no guaranteed pension.
Financial Pressures Driving the Change
Chichester University defends the shift as necessary for long-term sustainability amid rising costs. A spokesperson noted that proposals were discussed with unions in Joint Consultative Group meetings in September 2025 and February 2026. The institution's 2023/24 annual report reveals a healthy operating surplus of £3 million, bolstered by higher tuition fees and controlled staff costs. However, pension liabilities loom large, with a reported net LGPS deficit of £29.25 million, despite assets exceeding obligations in recent valuations.
Post-92 universities face unique challenges due to statutory pension mandates. TPS employer rates jumped to 28.68 percent in 2024/25, nearly double the 14.5 percent for the Universities Superannuation Scheme (USS) used by pre-92 institutions. This disparity has prompted a wave of subsidiaries across the sector, including Sheffield Hallam, Coventry, University of Worcester, Staffordshire, and Southampton Solent, to employ new staff outside TPS/LGPS eligibility.
Understanding Defined Benefit vs Defined Contribution Pensions
To grasp the controversy, it's essential to differentiate pension types. Defined benefit (DB) schemes like LGPS and TPS promise a retirement income based on salary and service—typically 1/60th or 1/57th of pensionable pay per year accrued. They shift investment risk to employers, ensuring stability but with high costs amid low interest rates and longer lifespans.
Defined contribution (DC) schemes, such as Aviva FlexHE, pool contributions into personal pots invested in funds. Retirement value depends on market performance, with no guarantees. Employer contributions are lower (often matching employee input up to 10-14 percent), but savers bear longevity and investment risks. UCU argues DC leaves staff vulnerable, especially in volatile markets, exacerbating retirement inequality.
- DB Advantages: Guaranteed income, inflation protection, spousal benefits.
- DC Drawbacks: Market-dependent, no guarantees, higher personal risk.
- Cost to Employers: TPS/LGPS ~28 percent vs DC ~14 percent.
UCU's Call to Action and Staff Perspectives
The Chichester UCU branch emphasizes the human cost, with members facing a stark divide: veteran staff secure in DB schemes, newcomers on inferior terms. 'This tears up national agreements and divides our workforce,' a union rep stated. National backing from UCU signals potential escalation, mirroring disputes at other unis where subsidiaries sparked ballots.
Staff forums buzz with concerns over recruitment challenges—prospective academics may shun Chichester for peers offering TPS. One anonymous lecturer noted, 'It's demoralizing; we're building the university's future but denied the same security as predecessors.'
A Growing Trend in UK Higher Education
Chichester is not alone. Post-92 institutions, numbering over 60, grapple with TPS mandates from the Further and Higher Education Act 1992. UCEA and Universities UK have urged government exemption, citing unsustainability. Subsidiaries allow 'exemption' by deeming employment ineligible for statutory schemes.
| University | Subsidiary Use |
|---|---|
| Sheffield Hallam | New academics via subsidiary |
| Coventry | Professional services |
| Staffordshire | All new staff post-2021 |
| Southampton Solent | Recent implementation |
| Chichester | All new staff from 2026 |
This fragmentation risks sector-wide unrest, with UCU pushing for government intervention to cap TPS rates or allow opt-outs.
Chichester's Financial Snapshot and Sector Context
Despite the surplus, Chichester's LGPS exposure (£29m net liability) and TPS costs strain budgets. UK higher ed faces £2.3bn TPS bill rise since 2024. Post-92s, reliant on domestic fees amid international visa curbs, borrow heavily—Chichester holds £23m net debt.
Solutions floated include TPS reform, hybrid schemes, or government grants. For now, subsidiaries proliferate, prioritizing survival over equity.University financials confirm pension pressures.
Stakeholder Views: Union vs Management
UCU: 'Attack on retirement dignity, exacerbates casualisation.'
Uni: 'Prudent amid sector volatility; existing staff unaffected.'
Experts note long-term recruitment risks, as top talent seeks TPS peers. Broader implications for morale, productivity in cash-strapped unis.
Implications for Prospective Staff and the Sector
Job seekers must scrutinize offers: ask about employment entity, pension details. For Chichester roles, weigh DC risks vs opportunities.
- Review scheme: DC pots grow with markets but no floor.
- Negotiate contributions: aim 10-15% employer match.
- Explore transfers: existing DB may port (check rules).
Sector-wide, calls grow for TPS overhaul to avert exodus.
Outlook: Strikes, Reforms, or Escalation?
UCU ballot looms; success could embolden resistance. Government may intervene if widespread. For Chichester, resolution hinges on dialogue. Amid UK HE's £1bn+ losses forecast, balancing affordability and fairness is paramount.
Prospective academics: prioritize pension-stable unis via resources like UK university jobs. Solutions lie in policy reform ensuring equitable retirement without bankrupting institutions.
Photo by Thomas de LUZE on Unsplash
