T&N pension fund nears collapse

ALMOST 40,000 members of the Turner & Newall pension scheme stand to lose large chunks of their nest eggs after the group's US parent pulled out of a multi-million pound rescue deal.

The T&N scheme, which has a deficit of nearly £900m, is now likely to become the biggest final salary scheme ever to be wound up in Britain.

The collapse will swell massively the current ranks of 65,000 victims from smaller funds. It also threatens to throw into turmoil Government plans to help those who lose out in pension wind-ups.

The scale of the fiasco is likely to put a huge strain on the planned new Pension Protection Fund safety net which will be funded by a levy on other employers.

Leading pension consultant John Ralfe said: 'It is an absolutely dreadful situation. This is bad news for the Government because of the sheer numbers of people facing a massive shortfall and the timing in the run-up to an election.'

Some 20,400 pensioners at engineer T&N face losing 20% of their promised benefits and a further 16,800 members who have not retired could lose up to 80% in a wind-up, Ralfe warned.

T&N's owner Federal Mogul is looking to restructure the firm and earlier agreed to three cash injections into the pension fund of £97m. This would satisfy its statutory funding obligations. But in a shock move, it has withdrawn its offer.

Independent pension trustees Alexander Forbes, which will be overseeing the likely winding up of the scheme, believed progress had been made in talks. They are stunned at the sudden U-turn. A spokesman said: 'We are disappointed with this turn of events.'

Federal Mogul said it is hopeful that a solution can be found to avoid a wind-up.