The Pension Protection Fund (PPF) has offered its biggest ever rescue package to help save the pension fund at manufacturer T&N.
The PPF is set to give £150m to the fund, which was left in turmoil after the company collapsed five years ago, according to reports in the Financial Times.
The PPF was launched in April 2005 to provide compensation for members of underfunded pension schemes when an employer becomes insolvent.
The arrangement with T&N will include a £255m cash injection from bondholders, who will then own its US parent company, Federal Mogul.
However, it is estimated that the full cost of paying out to members of £1.8bn will mean many members’ benefits will still see large cuts.
A PPF spokesman said: “More than 35,000 members of the pension scheme now have the confidence and security that they will receive benefits at the Pension Protection Fund levels of compensation.”
“The T&N pension scheme has current annual expenditure of around £69m,” he said. “The scheme has assets in the region of £1bn, which, together with the significant cash recovery secured, will enable the pension scheme liabilities to be met for a considerable number of years.”