BRITISH universities are under the cosh. In recent months politicians of all hues have argued they must do more to justify the hefty tuition fees the government allows them to charge. Andrew Adonis, a former Labour education minister, has blasted vice-chancellors’ generous pay cheques. To compound their problems, on July 29th it emerged that the Universities Superannuation Scheme (USS), the sector’s main pension pot, has a £17.5bn ($23.2bn) deficit, half the annual income of British higher-education institutions, and up from less than £9bn last year. (The USS disputes the valuation, and says that £12.6bn is a fairer number for this year.) The scheme has more than 400,000 members.
Pension-fund deficits are always volatile. But the USS one is gaping; indeed, it is the biggest of any British fund. Like other schemes, USS faces the triple problem of a greying population, low interest rates and declining returns on investments. Yet it holds less than others in gilts and bonds to match…Continue reading