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Last Updated: Tuesday, 7 December, 2004, 00:01 GMT
T&N workers face pension crisis
Money
Turner & Newall's pension scheme has been frozen since July
About 40,000 current and former workers at Turner & Newall face losing part of their pension amid reports that its parent firm will not fund the scheme.

It had been hoped that Federal-Mogul would continue to finance the scheme, which has a deficit of nearly 900m.

However, discussions between the US firm - which is in bankruptcy protection - and independent trustees of the pension scheme have broken down.

The scheme could now be wound up, leaving many workers without support.

Solution sought

"We are disappointed with this turn of events but will continue to work with all parties to seek a solution which is in the best interests of all the members of the pension scheme," said a spokesman for the T&N fund's independent trustees, Alexander Forbes Trustee Services.

Federal-Mogul said it remained "hopeful" that a solution could be found which would avoid the car parts firm's scheme having to be wound up.

We remain hopeful a solution can be found
Federal-Mogul

About 20,000 current or former workers and 20,000 retired staff are invested in the scheme.

The scheme was frozen in July by administrators for Federal-Mogul, which was forced into bankruptcy protection because of liabilities from asbestos related claims.

Financial guarantees

The US firm has been holding talks with independent trustees and its main creditors since October in an effort to safeguard the scheme.

A spokesman for Alexander Forbes Trustee Services claimed Federal-Mogul was unable to provide guarantees that T&N was in a position to continue making the "substantial" contributions necessary to support the scheme.

"We had hoped to find a way of enabling the pension scheme to continue and be restored to a sound financial position on the basis of solid financial commitments from Federal-Mogul," he said.

"Unfortunately, Federal-Mogul has not felt able to do this...and has now withdrawn its offer to continue the pension scheme."

Federal-Mogul said it did not believe the scheme - which has assets of about 1bn - would be wound up.

"Federal-Mogul has been working hard to find a solution to the T&N pension scheme issue and has come very close to a solution," it said in a statement.

"We remain hopeful that a solution..can be found."

Pension experts have warned that present T&N workers could get less than 40% of what they were expecting if the scheme is wound up.

Safety net?

If the pension scheme is wound up it would be the biggest closure of its kind.

The rules governing wind ups have received widespread criticism following a number of high-profile cases, such as ASW and Dexion, which left workers with much-reduced pensions.

From April 2005, the government is introducing a Pension Protection Fund, which should offer a safety buffer for work-based pension schemes.

It is also setting up a 400m financial assistance fund for workers who have already lost out.

However, a growing chorus of experts believe the fund is insufficient to tackle the scale of the problem, which is already affecting an estimated 65,000 workers.


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