The £775m hole in the retirement scheme of failed engineering company Turner & Newall (T&N) could sink the government’s new Pension Protection Fund (PPF), the CBI has warned.
T&N has begun talks with the the Pensions Regulator about entry into the PPF, according to the Times. Entry would save a substantial part of the retirement benefits promised to T&N’s 37,000 fund members.
It comes just days after it emerged that the PPF was likely to take on the £210m pension deficit of Heath Lambert, the insurance broker.
Susan Anderson, HR policy director of the CBI, said companies would have to ask their pension scheme members to pay £50 a year to help them to meet the cost of funding the PPF.
The PPF, which was set up to compensate workers who lost their retirement savings when their employing companies went bust, will need about £300m a year to survive.
“The size of T&N’s deficit is staggering,” Anderson told the Times. “The calls on the PPF are coming in thicker and faster than we thought.”
The PPF, which said it had not received a formal application from T&N, has insisted that it could cover the costs of schemes such as at the engineering firm.