UK – The Universities Superannuation Scheme has named a professional manager, Tom Merchant, as chief executive following the retirement of David Chynoweth.

The appointment follows what the fund’s own most recent annual report terms “poor investment returns” which have seen its value fall from 18.7 billion pounds in 1999 to 15.4 billion pounds as at March 2003.

Merchant took over on an interim basis when Chynoweth left in June. “I’ve grown to like the company,” Merchant, 55, said in an interview. “When the position was advertised I put my hat into the ring.”

He said he is not a pension person but said there was plenty of expertise within the fund, the UK’s third largest public sector pension scheme. He said the fund is facing different challenges such as pension taxation and the forthcoming pension bill. “The world is changing around USS,” he said.

Merchant said there would be no change in management structure: “It’s a very well run pension fund.” And his appointment would not result in a shift in asset allocation. “There are no plans to dramatically change the asset allocation.”

Merchant joins the scheme after four years as an independent management consultant. He is an engineer by training.

“Tom Merchant has been responsible for the development of commercial and industrial buildings, hotels, shopping centres and leisure projects,” the scheme said. “In the financial field, he has worked with due diligence teams on corporate finance projects and led change management programmes.”

In the year to December 31 2002, the fund returned –16.7%. According to its most recent report, this was “well below both price inflation and below its peer group average”.

“Poor investment returns for the last three years have seen the fund underperform the WM 50 average over both five and ten years,” the report adds.

Liverpool-based USS was set up in 1974 to administer university pensions.