Student unions could risk financial ruin as they try to prevent the collapse of their £22 million pension scheme.
The Students Union Superannuation Scheme has assets of only 50 per cent of its £46 million liabilities. The trustees may have to ask individual unions to pay lump sums amounting to hundreds of thousands of pounds to make up the shortfall or increase their contributions by about 25 per cent to save the pensions of some 1,500 members.
The unions, although legally obliged to meet the liability, are unlikely to be able to afford the extra cost. They could be bailed out by their universities but the universities may be unable or unwilling to pay.
A vice-chancellor who did not wish to be named said: "A very large bill has to be paid. This is serious money which will have to be paid either by the unions, who are unlikely to have it, or by their universities, which would prefer to hang on to it, assuming they have it in the first place. It would be intolerable for the scheme to be allowed to collapse."
Peter Fisher Godwin, chair of the SUSS trustees, wrote to student union general managers earlier this year, saying that a valuation in October 2001 showed the pension scheme's assets were £22.533 million. This compares with past service benefits of £46.249 million, leaving a deficit of £23,716 million.
He said that the scheme suffered from poor stock market conditions and improved life expectancy. Salaries had also risen more than had initially been assumed. Across all unions, the equivalent of £135,000 extra per month is needed for 23 years to clear the deficit.
There will now be a consultation period to decide the best of a number of rescue options. These include reducing the accrual rate, increasing the pension age to 70, or closing the scheme to the future accrual of benefits.
Mr Fisher Godwin told The THES that it was not an option for the scheme to "wither on the vine".
He said: "With goodwill and some thought we will seek to ensure that it's an affordable scheme for the the student unions."