Wronged dons

SIR – It is apparent that the staff at many newer universities (former polytechnics) are not engaged in the series of strikes over pensions. This is because most are not members of the Universities Superannuation Scheme, a funded pension plan, having remained members of the larger Teachers’ Pension Scheme.

The latter is an unfunded publicsector plan that relies on the UK government (which means future generations of taxpayers) to pick up the bill eventually. Technically, the size of the pension deficit at the Teachers’ Pension Scheme, as with all public-sector unfunded schemes, is the size of its total liabilities, since it has no invested assets, just the contingent asset that the government will eventually pay.

If the proposed reform of Universities Superannuation Scheme retirement benefits goes ahead, there is the prospect that future staff at the older universities will have less attractive pensions than those at the newer ones, despite both having the same salary scales.

This is an example of the anomalies that can arise between funded and unfunded pension plans. A potential misallocation of economic resources that is contributing to this inequity is the opacity of government accounting, as no future liabilities of any unfunded public-sector pension schemes (about £1.5 trillion) are included as part of the official national debt.

Professor Emeritus Gerry Dickinson Cass Business School

London EC1