Firstly it is necessary to try and distinguish between emails which contain information which are business records and emails which are just miscellaneous data or information generated on a day to day basis. You must treat these two types of information differently.
The miscellaneous data or information is normally transient in nature and should not be retained longer than it performs a function. So it should be deleted once it has served its purpose. This applies equally to electronically generated information and paper based information. The formal record information has to be handled in a more official way according to the institutions policies and procedures.
At present there is no legislation in the UK which requires the retention of emails per se. However, there are periods of time set down in law for the retention of certain information whether this is held in emails or elsewhere. For example, financial returns, health and safety information or indeed regulatory information require to be retained for a fixed period of time. These are fairly straightforward with financial penalties imposed for breach. Colleges and universities would be required to assess whether they retain information of this type in emails, ensure it is retained for the required period of time and have a policy in place to ensure that retention is in the appropriate place on the system. An institution would also need to consider retaining the content of some emails for longer than others. For example negotiating a contract, which includes email communications, would perhaps require the information contained therein is stored until completion of the contract.
The JISC Study of the Records Lifecycle has a retention schedule with suggested retention periods for specific types of information and also provides the legal reason (when there is one), for the period of retention. The JISC infoNet records management pages at http://www.jiscinfonet.ac.uk/records-management have links to this and other information on the retention of emails as well as on general records management.