As a result of the current turmoil in the financial markets, experts predicted this week that universities may have to plough more cash into their staff pension schemes - or cut members' benefits.
The credit crunch and volatility in share prices have weakened many pension schemes. Recent figures from the Pension Protection Fund show that the total shortfall faced by the 6,468 final salary schemes currently in deficit has risen from ?36.9 billion a year ago to ?122.1 billion.
At 31 March, the Universities Superannuation Scheme (USS) had an estimated funding level of 77 per cent, a shortfall of some ?9 billion.
Financial statements show the USS has a relatively high proportion of its assets in equities, meaning that it is affected by market fluctuations.
At the end of March, 78 per cent of USS's assets were in equities. The average level of equity investment in FTSE 100 pension schemes is around 53 per cent. Over the year, the USS's assets fell from ?30.358 billion to ?29.098 billion. However, since the end of March, the value of equities worldwide has crashed.
On 17 October, the USS published a statement on its current financial situation, which sought to reassure members. It said: "USS maintains a well-diversified investment portfolio, which is designed to withstand volatile market movements. Furthermore, USS's income from in- vestments and contributions is higher than its expenditure on benefits. We are therefore confident that there will be no impact on the fund's abilities to meet its obligations to its members going forward."
Michael Bourn, former deputy vice-chancellor at the University of Southampton, who has written on pensions for the British Universities Finance Directors' Group, said the USS pursued a "risk-accepting" investment policy, and could have been hit hard by the credit crunch.
"Since 31 March, equities around the globe have lost between a quarter and a third of their value," Professor Bourn said. "Unless USS has dramatically reshaped its investment profile - something not hinted at in the newly published members' report - USS has apparently suffered a loss in value of about a third of its equity investments, about ?8 billion."
Such a loss in value could increase the pressure on the trustees to raise contributions, or to reduce members' benefits. Currently, members contribute 6 per cent of their salary and higher education institutions 14 per cent, but a Universities UK meeting in September heard that institutions belonging to the USS may have to make a 2 per cent increase in contributions in the near future due to members' increased life expectancy.
A spokeswoman for the University and College Union said: "In the long term, USS seems to be a strong scheme. It faces, like every pension scheme, the short-term effects of the economic crisis. It will have been hit and harsh decisions may have to be taken - the contribution rate may have to be revised - but we will not know the full picture until the market has stabilised."
A statement on the university's funding position is due in January.