UK’s biggest private pension fund sells all its Israeli bonds

The Universities Superannuation Scheme sold its entire £80 million holding of Israeli bonds between February and July this year.

Britain’s biggest private sector pension scheme said the decision to sell all its Israeli government bonds had been taken on financial grounds alone and was not the result of a move to completely divest from the country.

The £78 billion scheme had come under pressure from UCU, the lecturers union, to divest investments supporting what it has called the “genocidal Israeli war machine”. The union has been lobbying the USS to divest since before the Gaza conflict erupted in October.

The UCU, which has about 120,000 members, welcomed the bonds disposal and said that it wanted the pension scheme to go further and withdraw from investing in weapons companies that were supplying Israel.

The pension scheme said the decision had been taken on financial grounds alone. “These are relative value decisions, not exclusions,” it said. “It would be wrong to state or imply these decisions were made for anything other than financial reasons.”

One senior source said the decision had been made by a single portfolio manager and that “there has been no top-down decision in relation to Israel”.

The USS manages pension savings for 554,000 present and former university workers, including 88,000 who are already retired. It is a big institutional investor, buying shares and bonds worldwide. It prohibits investment in only one country and that is Russia, in the wake of its invasion of Ukraine in 2022. That divestment decision was on both financial and moral grounds, it has said.

In November the union wrote to the USS saying that it should apply the same “moral” grounds it had cited for pulling out of Russia to divest from Israel. “The Palestinian people deserve no less support than the Ukrainian people,” Dooley Harte, its pensions officer, wrote in a letter to Carol Young, the USS chief executive.

On January 29, Harte wrote to Dame Kate Barker, chairwoman of the USS trustees, calling for divestment from companies linked with the production of F35 fighter jets, which includes BAE Systems, and a review of all investments linked to the Israeli government.

Jo Grady, general secretary of the union, said: “This decision is a huge step … and a historic win for the Palestine solidarity movement. Cutting ties with the Israeli war machine is not only a matter of ethical and legal obligations, but prudent financial management. These are bad investments which are incongruent with scheme managers’ fiduciary duty.”

A USS spokesman said: “We can only make investment decisions on financial best interest grounds, so this isn’t a result of the range of views members may have or any form of comment on events other than the financial circumstances.”