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University staff across the UK\u00a0are striking<\/a>\u00a0over changes to their pensions. Academics at 64 universities, who are members of the University and College Union (UCU) and who are signed up to a defined benefit pension scheme (known as USS), are faced with cuts that could leave them significantly worse off in retirement.<\/p>\n Universities UK, the umbrella group for UK universities that manages the pension scheme,\u00a0claims<\/a>\u00a0that the change is needed because there is not enough money to make the scheme financially viable. This is disputed by the striking staff and a closer look shows why this has merit.<\/p>\n From the outside, it might look like another case of a pension black hole problem hitting another UK institution. Many companies have made the news in recent years for pensions problems \u2013 retailer\u00a0BHS<\/a>, construction company\u00a0Carillion<\/a>,\u00a0steel firm TATA in the UK<\/a>, telecoms giant\u00a0BT<\/a>, just to name a few.<\/p>\n What\u2019s more, the UK is much worse than many other countries when it comes to pensions regulation \u2013 and has a widening pension deficit\u00a0across the board<\/a>.<\/p>\n But there is a big difference between the aforementioned failing companies and the universities whose staff are striking. These companies were all suffering from poor performance, whereas universities are not.\u00a0BHS<\/a>\u00a0and\u00a0Carillion<\/a>\u00a0collapsed altogether.<\/p>\n BT has had a tough ride\u00a0since the financial crisis<\/a>. In March 2016 its revenues of about \u00a319 billion were still lower than those reported in March 2009 (\u00a321.7 billion). BT\u2019s average dividend over the 2010-16 period was only \u00a30.42 per share compared with \u00a30.82 per share in 2009. Plus, the BT pension deficit of \u00a314 billion came to about 70% of its total revenue.<\/p>\n In contrast, the size of the USS deficit is\u00a0not entirely clear<\/a>. A \u00a317.5 billion deficit is quoted under Financial Reporting Standards accounting rules. But USS says this figure is incorrect and that its actual deficit is \u00a312.6 billion.<\/p>\n The differences result from how they account for mortality rates, discount future liabilities and value assets. Deficit\/surplus calculations are always imprecise, as they are based on assumptions of various rates of return well into the future.<\/p>\n What we do know is that the universities\u2019 annual revenue is\u00a0nearly \u00a335 billion<\/a>. Their pension deficit is therefore about 36% of revenues \u2013 making it appear much less of a problem than that facing a company such as BT.<\/p>\n Plus, when it comes to finances, it is safe to say that, in the past decade or so, British universities have been in good financial health. Indeed, in the last few months, when justifying their high salaries and expenses, vice chancellors\u00a0have<\/a>\u00a0stressed<\/a>\u00a0how successful they have been in managing their university finances.<\/p>\nProblems with the deficit<\/strong><\/h4>\n