THE difficulties faced by the universities' pension funds are serious. Insolvency is not a prospect either the staff or those responsible for managing their savings will have contemplated until now. Lecturers will have reason to be outraged if the entitlements they had been led to expect after years of service - and to which they have contributed from their own salaries - are now threatened by a new law designed, in theory, to protect them from the kind of management mistakes that have now come to light. But, let there be no mistake about this: management mistakes are to blame for the present debacle. The Government is the wrong address for lecturers' protests. Ensuring the solvency of a pension fund must be considered a core management skill for any institution. If it has neither the manpower nor the expertise to manage its own funds directly - and few but the largest companies would dream of doing so - it should place them in the hands of an independent pension fund manager with strict instructions as to the level of capital required to ensure pension requirements are covered and some guidance as to whether funds should be invested conservatively or aggressively. A well-managed fund, unless it started from scratch at or after the height of the 1993 stock market bull run, should have done better than keep up with inflation in recent years. Unless the ratio of contributions to predetermined benefits has been set too low, there is no good reason why these funds should not have been in profit. There are, in fact, reasons why the contributions could have been set too low. Low staff turnover - a feature of academic life - means relatively few employees may be leaving while their pension entitlements are still comparatively low and the fund is reaping the full profit from their contributions. Equally, salary-related 'fixed-benefit' pensions can prove costly if remuneration for the most senior staff is allowed to rise too fast. A switch to 'fixed-contribution' pensions, which link benefits to the state of the pension fund, may be unfair to those whose life-time contributions turn out to be less than they might have been under the old system. But, over the longer term, particularly in periods when salaries rise more slowly than inflation, fixed-contribution funds may pay better returns than fixed benefits. The universities argue their funds should not have to cover 100 per cent of pension entitlements, because they are unlikely to lose all their staff at the same time. That does not, however, justify mismanaging funds to the extent that they cannot keep up with rising entitlements. Nor should the universities rule out the possibility of a mass exodus. A pension fund that fails to allow for that contingency is not providing employees with the security they expect and deserve from the universities, simply because they regard themselves as immune to instability.