Pension windfall in California

Staff employed by the University of California system will be able to continue their lengthy holiday from pension contributions for another year after the system's investments outperformed their targets.

Employees were due to begin contributing to the fund in 2007-08 after not being required to do so for 17 years. But the University of California's £24 billion pension fund earned more than expected on its investments - 19.1 per cent over the financial year, which is 1 per cent above target.

However, Katherine Lapp, UC's executive vice-president for business operations, said pension contributions would have to restart at some point in the near future to ensure that the plan remained viable.

The University of California said that changes to the fund, which include diversifying the funds assets, good returns on non-US and alterative investments and measures to monitor the fund's performance had all helped to boost its income.