Employees working for failing companies may have their pensions protected by an industry-wide safety net.
Those who stand to lose their pension rights would be protected by the Pension Protection Fund, reports the Financial Times.
The Pension Protection Fund will initially be funded by contributions from businesses, eventually leading to contributions in accordance with levels of under-funding in their pension funds.
Russel Agius, a director at pensions consultancy Higham group, said: “This does a lot to strengthen the trustees’s hands in negotiation with employers on pensions debts.”
The statement will offer reassurance to the 40,000 employees of Turner & Newall. The pensions of employees at the automotive components maker will be guaranteed if Federal Mogul, its parent company, goes bust.