Hopes rise for T&N pension scheme

The T&N pension scheme shortfall is £300m

A financial lifeline has been offered to 40,000 members of the troubled car parts maker Turner & Newall's (T&N) pension scheme.

The scheme currently faces a £300m shortfall, and could be wound up with some members losing part of their pension as a result.

Under the plan, a major creditor of T&N's parent company will pay into the pension scheme to keep it afloat.

The pension schemes trustees gave a cautious welcome to the rescue scheme.

Frozen fund

T&N's pension fund was frozen by administrators of Federal Mogul, the US firm which owns T&N and which went into bankruptcy protection in 2001 after it was hit by asbestos claims.

This is a welcome step and the trustees will carefully consider the offer to ensure it's in the members' best interests T&N pension scheme trustees

The plan could mean that the T&N pension scheme would not be wound-up.

Under current wind-up rules, up to 20,000 members of the T&N scheme who have yet to retire could face losses of up to 70% of their pensions.

If the pension scheme is wound up, 20,000 existing pensioners will also not get inflation-linked rises to their pensions.

US investor Carl Icahn, the largest creditor of Federal Mogul, is understood to have offered to pay nearly £14m ($25m) into the T&N pension scheme each year for the first three years after the firm emerges from administration.

The eventual aim is to close the shortfall in the T&N pension scheme within 10 years.

"This is a welcome step and the trustees will carefully consider the offer to ensure it's in the members' best interests," a spokesman for the scheme trustees said.

The three unions representing T&N employees and pensioners - Amicus, T&G and GMB - are studying the plan and will be making a statement later on Thursday.