UK - The Universities Superannuation Scheme - the fourth largest pension fund in the UK - lost nearly £2bn in the year to March 2001.
The fund - which has more than 80% of its assets in equities – fell from £21.9bn to £20bn. The fall, revealed in the USS annual report and accounts, was blamed squarely on the current market downturn.
USS chief executive officer David Chynoweth assured that the scheme was still in surplus, but revealed that the events of September 11 and subsequent concerns over share prices had encouraged it to have a further interim valuation on September 31.
Chynoweth said the actuarial report found that the fund still had a value of 104% over its liabilities.
He added that the fund had no plans to change its asset allocation to equities.
The annual report and accounts said that its loss of value in the year to March 2001 – only the third downturn it had suffered in 20 years – was in part reflected by a poorer than expected performance compared to other major funds. According to the report, the fund failed to meet its target of ranking in the 90th percentile of the WM 50 Index over the last year.
The only bright note in the report was that Capital International, which manages 8.3% of the fund as a global balanced portfolio, had “another excellent year”.
Most of the USS fund is managed internally, with Capital International, Baillie Gifford (7.8%) and Schroders (7.9%) operating as its external managers.
The report also revealed that USS’s decision in May to allow the “significant number of academics” employed on irregular contracts into the scheme was done to help universities which did not want to set up stakeholder schemes.
By doing this such universities could avoid the legal obligation to set up a stakeholder scheme.
The USS scheme gained 14,000 new members over the year, with 169,800 members in total, including 91,300 active members.
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