The University of Sunderland will from 1 August engage new academic tutors through a wholly owned subsidiary company, a move that will make those staff ineligible for the Teachers’ Pension Scheme (TPS), the institution’s trade union has said.
Union warns of two-tier workforce
The University and College Union (UCU) criticised the decision, saying it risks creating a “two-tier” staffing structure and will hit some of the institution’s lowest-paid workers hardest. The union described the subsidiary as a means to restrict access to the TPS and said the change will damage morale among academic tutors, who provide additional student support in casual roles.
“It means the institution will be a pariah in the north-east and across the sector,”
The UCU also called the company a “sham” and urged action, reiterating that the university has a legal duty to provide TPS access and claiming Parliament should intervene to stop employers it described as reneging on that duty.
Financial argument and sector context
Sunderland has justified the move as a response to pension-related costs. The union’s analysis, however, suggests that employing tutors through the subsidiary will save the university only about £36,000 in the coming academic year — a relatively modest sum by higher education standards.
More substantial savings from reduced employer contributions to the TPS are expected from April 2027, when contribution rates are due to fall from 28.68% to 17.68%. The Universities and Colleges Employers Association (UCEA) has estimated the lower rate could deliver up to £900 million of savings across the sector by the end of the decade. The UCU, meanwhile, projects Sunderland could benefit by more than £3 million a year from the reduced contribution rate after April.
Wider trend across universities
Sunderland is not alone in establishing subsidiary companies as a means to alter employment terms. Other institutions, including London South Bank University and Northumbria University, have pursued similar arrangements. Pension experts have warned that, given the impending fall in employer contribution rates, relying on subsidiaries to limit pension liabilities is becoming increasingly difficult to justify.
Implications for staff and students
Academic tutors are among the university’s lowest earners and typically occupy casual positions that are most exposed to job insecurity. The UCU said that placing such roles outside the TPS will do little to address job insecurity and will instead entrench disparities between staff doing comparable work.
- Who is affected: New academic tutors employed from 1 August through the subsidiary.
- Pension impact: These tutors will not be eligible for the Teachers’ Pension Scheme.
- Projected short-term saving: Approximately £36,000 in the next academic year, per UCU figures.
- Projected sector saving: Employer TPS contribution cuts could save up to £900 million by 2030, UCEA estimate.
| Item | Figure |
|---|---|
| Current TPS employer contribution rate | 28.68% |
| Rate from April 2027 | 17.68% |
| Estimated Sunderland saving (next year) from subsidiary | £36,000 |
| UCEA estimated sector saving by 2030 | £900 million |
Questions for universities and policymakers
The move at Sunderland sharpens long-running debates about how universities balance budgets while maintaining fair employment terms. With employer contribution rates set to fall substantially, critics argue that measures such as creating subsidiaries look less defensible and risk undermining trust between staff and institutions. Supporters of subsidiary models say they can offer flexible approaches to employment and cost control, particularly for casual or short-term roles.
For pupils, parents and students, the issue is not only one of institutional finance but of teaching quality and stability: casual tutors often carry out essential student-facing duties. Changes to their pay and pension prospects may affect recruitment, retention and the student experience.
As other universities weigh similar options, the sector faces ongoing scrutiny over whether cost-saving strategies are proportionate, legally sound and in the best interests of staff and students alike.
