UK - The Universities Superannuation Scheme (USS) has paid £1.8m (US$2.9m) in bonuses to its investment staff despite its funding level dropping severely, according to its annual accounts.
The trustee company - which runs the scheme - said at March 31 the funding level had fallen to 74% from 103% the previous year (Global Pensions, July 28, 2009).
The report said the decrease reflected the fund's actual investment performance over the year and it warned further deficits in the future may result in the scheme asking for higher contributions from its members.
However, a USS spokeswoman justified the decision to reward its investment staff.
She said: "USS is a long term investor and bonus payments are based on performance over five years rather than one year. Bonus payments in any one year, therefore, are not necessarily related to performance in that year."
She added: "Market-relative performance has been good - bonuses are only paid if benchmarks are met or surpassed over five years."
According to the report, the maximum amounts that could be paid to investment staff are £630,000 in 2012, £825,000 in 2013 and £450,000 in 2014, as part of the scheme's long term incentive plan .
USS said the incentive plan was introduced for investment staff from January 1, 2007 "to ensure that a significant portion of the rewards available to key members of staff is tied to the long-term performance of the fund, with the objective of promoting a balance between long-term and short-term objectives".
The announcement of the bonus payment comes amid reports of heavy redundancies in the UK higher education sector.
Data by the Universities and College Union - which appoints three of the directors of the USS trustee company - revealed last month that in total across the UK 5891 jobs are at risk or being cut with 4593 in higher education and 1298 in further education.
UCU pension policy officer Geraldine Egan was not immediately available for comment.
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