UK universities pension fund worth billions invests in companies linked to Israel

A UK pension fund for university staff has investments in companies accused of being complicit in possible Israeli war crimes in Gaza.

The Universities Superannuation Scheme (USS) fund is one of the UK's largest pension funds, worth £2.8bn ($3.6bn). Approximately 420,000 university staff members pay into the fund every month, with their institutions matching their contributions.

Portfolio documents seen by Middle East Eye show that the USS has allocated funds to companies that rights groups have linked to Israel’s war in Gaza.

The USS allocates £32m to the USS UK Equity Fund as part of its pension portfolio. Within that fund, it invests in Barclays Bank, Qinetiq and Melrose Industries, which rights groups accuse of being complicit in suspected Israeli war crimes. 

The latest figures include the USS investing £327,420 in Barclays, £115,560 in Melrose Industries and £25,680 in QinetiQ. 

Earlier this month, the Palestine Solidarity Campaign (PSC), Campaign against the Arms the Trade (CAAT) and War on Want revealed that Barclays Bank has financial ties to companies producing weapons and military technology used by Israeli armed forces.

The rights groups found that Barclays has invested £2bn in companies arming Israel, including Elbit Systems, Raytheon and Caterpillar. It added that Barclays also provides financial services, including loans, worth £6.1bn to these companies.  

QinetiQ, a British defence technology company, has collaborated with the Israeli army to develop and supply the Watchkeeper drone system, which was developed jointly with Israel's Elbit Systems. QinetiQ's contributions to the Watchkeeper project may include expertise in systems integration, testing or other support services.

Data obtained by CAAT revealed that QinetiQ received eight licences between 2008 and 2021 to export military goods to Israel.

A spokesperson from QinetiQ said the company did not "provide weapons to Israel" but said it "previously provided a small number of unscrewed aerial target services - in practice, that means we have previously sent a small in-country team to operate our targets during training."

Melrose Industries, which acquired engineering giant GKN in 2018, produces components for various fighter jets used by the Israeli Air Force, including  F-15, F-16, F-18, F-35 and SAAB Gripen, according to CAAT.

A spokesperson for Barclays said “decisions on arms embargos are rightly the job of elected governments” and not banks. 

“We recognise the profound human suffering caused by this conflict. We have been asked why we invest in nine defence companies supplying Israel, but this mistakes what we do. Barclays does not make its own investments in these companies,” said the spokesperson. 

“As a bank, our job is to provide financial services to businesses, including those in the defence sector. Clients in this sector include US, UK or European companies which supply defence products to NATO and other allies including Ukraine and are an important contributor to our security in the UK. 

"Decisions on arms embargos are rightly the job of elected governments.”

MEE did not receive responses to requests for comment from Melrose Industries. 

Adam Almeida, a data analyst based in London, told MEE that the "opaque nature" of investment management means many people are unaware that they are putting money into pension funds that invest in industries like the arms industry or fossil fuel companies. 

"The convoluted nature of pension fund management means that it is tremendously difficult to decipher how exactly our contributions are used to invest in questionable industries like the arms trade and fossil fuel companies," said Almeida. 

"In this case, however, it is clear that the USS hands over investment to asset managers who in turn commit that money to hundreds of British firms, some of which are profiteering from the ongoing bombardment of Gaza." 

A spokesperson for the USS said the fund was monitoring the "situation closely, and, in particular, the implication of recent events on our investment outlook". 

"We will keep our portfolio and broader positions under regular review and will always seek to invest in what we consider to be the best financial interests of the scheme’s members and beneficiaries,” said the USS spokesperson.

Earlier this year, the UCU, which represents British academics, criticised the USS for refusing to review investments in companies connected to Israel's actions in Gaza.

The UCU highlighted how the USS issued a statement seven days after Russia invaded Ukraine, stating there was a "financial" and "moral" case for divestment from its Russian holdings. 

UCU General Secretary Jo Grady described the USS's refusal to divest from companies linked to Israel's actions in Gaza as "shameful" and called for the pension fund to reconsider its position. 

"It is shameful that USS still hasn’t made moves towards divesting from Israel’s war machine," Grady told MEE. 

"Considering the ICJ provisional ruling and now the call for arrest warrants from the ICC prosecutor, the legal and ethical obligations on USS to divest are overwhelming. How many more Palestinians must be killed before our pension fund and British universities more widely end their complicity?"