Deficits within the Universities Superannuation Scheme increased to £11.5bn in the year to March 2013, but fell to £7.9bn in the following three months, its latest members’ annual report has revealed.

The USS said liabilities increased substantially in the year to March largely due to a fall in gilt yields driven down by quantitative easing.

The funding level of the scheme fell to 77 per cent on a technical provision basis at March 2012, due to the fall in gilt yields. The funding position on a buy-out basis fell to 50 per cent. The funding ratio in 2013 remained unchanged.

During the year to 31 March 2013 the assets of the fund increased by £4.7bn, or 13.9 per cent.

In March 2011, the trustee board implemented a deficit recovery plan over a period of ten years in consultation with employers and the University and College Union.

The first component involves the employers making payments equal to 16 per cent of salaries in the first six years of the recovery plan. The employers will make payments equivalent to 2 per cent of salaries for the remaining four years of the plan.

USS has 34 per cent of its portfolio invested in overseas equities, 24 per cent in fixed interest, 19 per cent in alternative investments, 16 per cent in UK equities, 6 per cent in property and 1 per cent in cash and other assets.

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