Press Report : Car-maker failure could threaten pension lifeboat

Philip Aldrick, Daily Telegraph, 22nd December, 2008

Jaguar Land Rover, owned by India’s Tata, is in talks with the Government about a £500m-£1bn state loan to help it through the downturn, protecting 75,000 jobs, while Vauxhall’s US parent General Motors has been teetering on the edge of collapse.

Despite the talks, administration remains a live possibility after Business Secretary Lord Mandelson yesterday said Jaguar Land Rover would have to “look to themselves and their own resources” before the Government would intervene. GM was given a lifeline on Friday after securing an $8bn (£5.4bn) US state loan, but the deal was conditional on a restructuring.

Administration, while costing thousands of jobs, would also imperil the UK Pension Protection Fund. John Ralfe, an independent pensions consultant, has calculated the combined deficit of Jaguar, Land Rover and Vauxhall pension schemes would be £1.5bn in the event of collapse – £600m at Vauxhall, £500m at Jaguar and £400m at Land Rover.

The PPF, which guarantees 90pc of scheme members entitlements, would face a loss of “£400m-£500m depending on recoveries from the liquidation”, he said. Last year, Vauxhall’s final salary schemes had a deficit of £164m and Jaguar’s a surplus of £125m. In 2006, the most recent data available, Land Rover a deficit of £71m.

Mr Ralfe said deficits have ballooned largely because of the 35pc fall in equity values this year. The PPF already has a shortfall of £517m, £160m of which is from Rover – its single largest scheme with 6,000 members. The PPF is bracing for a raft of new collapses, and plans to charge higher risk companies higher levies in future.

[Source: Daily Telegraph]

Clive Goldthorp

About the Author:

Clive claims that his interest in the BMC>MG story dates back to his childhood in the 1960s when the family’s garage premises were leased to a tenant with an Austin agency. However, back in the 1920s and 1930s, his grandmother was one of the country’s first female Garage Proprietors so cars probably run in his genes! Admits to affairs with Alfa Romeos, but has more recently owned an 06/06 MG TF 135 and then a 15/64 MG3 Style… Clive, who was AROnline’s News Editor for nearly four years, stood down from that role in order to devote more time to various Motor Racing projects but still contributes articles on as regular basis as his other commitments permit.

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