UK Pension Fund Could Shift £6B from Equities

May 30, 2006 ( - Britain's second largest pension fund is considering moving about £6 billion out of equities into alternative investments.

The Financial Times reports that Universities Superannuation Scheme now has 80% of its £21.7 billion in assets in UK and overseas equities.The management committee of the USS trustee company will vote on the proposed change on June 14.

The change in policy would leave the university system still heavily in equities, with more of that illiquid and thus presenting a higher risk, according to the Financial Times.

USS’ chief investment officer, Peter Moon told the Financial Times that moving assets out of equity is not only to reduce risk, but also to bring in higher returns. Last year, the fund fell into a £6.6 billion deficit.

The decision to adjust its asset allocations was adopted from an asset-liability modeling exercise by Mercer Human Resource Consulting, which recommended that 20 – 30% of the UK fund’s assets should be changed over to alternative assets.