UK - The government has demanded US auto component manufacturer Federal Mogul makes the "maximum possible contribution" to pensions owed to 40,000 UK workers.
Around half the final salary scheme members at Turner & Newell – the UK arm of Federal Mogul – stand to lose 70% of their benefits and the rest expect to miss out on inflation-linked rises if the scheme is wound up.
Federal Mogul is currently under Chapter 11 bankruptcy protection and while it has vowed to make good any deficit in its American scheme, it has refused to do the same at T&N.
But pensions minister Baroness Hollis (pictured) said it was up to the group of Turner & Newell companies to “make the maximum possible contribution” to meet the pension promises of scheme members.
Representatives from trade unions Amicus, the Transport & General Workers’ Union and the GMB have met with Federal Mogul’s new owners – majority shareholder Carl Icahn and asbestos creditors – and an independent trustee in New York over the issue.
The unions want the firm to pay a lump sum of £65m into the scheme as well as annual contributions of £7m. This proposal has been rejected by its independent trustee.
Hollis said: “We expect the T&N companies to make the maximum possible contribution to meet the obligations to scheme members. Until these discussions are complete we are unable to draw any conclusions about the future of these schemes.”
The T&N scheme is 98% funded under the minimum funding requirement and would be able to “run on” if the company continued to make annual contributions and a one-off lump sum.
However, a spokesman for the firm said that Icahn and the asbestos creditors did not want to fund the estimated £300m scheme shortfall. He said: “The reality, albeit harsh for all concerned, is that the new owners of Federal Mogul do not want to assume any contingent liabilities – whether they are from asbestos, debt or pensions.”
Most people think it is right that savers take responsibility to protect from pension scams.
More than 100,000 savers face being landed with huge tax bills following tiny uplifts to their pension, a Freedom of Information (FOI) reply has revealed.
Alan Pickering says politicians should have the freedom to redefine what is meant by 'absolute'