'Don't punish workers' plea over Yorkshire's pensions black hole

Unite regional secretary Davey Hall said it would be wrong for payouts to be restricted because of black holes built up at corporations, which run into tens or hundreds of millions of pounds.

"I believe that the employees of these pension schemes should not be punished or suffer detriment to their pensions bearing in mind they have been contributors for their working lives."

Analyst Laith Khalaf, from Hargreaves Lansdown, said companies' pension promises to existing staff would be honoured but there were likely to be savings made elsewhere.

Some firms' pension funds took contribution holidays in the 1990s which has led to criticism that employers "didn't fix the roof while the sun was shining".

"It is easy to say that with hindsight but at the time no-one saw a problem with it," Mr Khalaf added. "There were large stock market falls in the early part of the 2000s and the deficits have been with us since then."

The scale of the black holes mean firms have got to put pension fund assets where they think they can attract the largest return, even if it is over a very long period, he said.

"That is why they have made investments in equities because the deficits are not going to fall in the next few years – (but) in 30 to 40 years."

Rachel Reeves, Labour MP for Leeds West and a former HBOS economist, said: "It is essential that people who have worked hard all their lives can look forward to their retirement, not leave in fear that they won't be able to make ends meet."

HBOS has agreed with pension fund trustees to make contributions equivalent to 140m a year until June 2019 in a plan to eliminate its deficit.

Morrisons declined to comment on its scheme. It reduced its deficit to 17m in January this year and has poured in 200m over the past two years.

A spokesman for Asda said its scheme, which had a 210m deficit last year, closed to new members in 2005. It includes 4,000 staff out of 175,000 nationwide. The rest can join a defined contribution scheme, which is less expensive to run.

Northern Foods, whose widening deficit was driven mainly by a significant fall in corporate bond yields, said there was no intention to cut its dividend.

"Whilst we recognise there has been some speculation over our pension schemes, we have been very clear that we will continue to take pro-active actions to reduce volatility," a company spokesman said.

"We have worked with the trustees to implement a liability driven investment programme, which involves changing the investment portfolio to target a better return and match the profile of the pension liability more closely, we have completed the move of senior management from the defined benefit scheme to a defined contribution scheme and we implemented an enhanced transfer value exercise, which will reduce the numbers in the scheme. We expect to continue such actions."

Bradford & Bingley said its 10-year plan to eliminate its deficit was "not expected to have any adverse impact on the company corporate objectives agreed with HM Treasury."

Sean Christie, finance director of Croda, said: "We are still very positive about our fund. A lot of companies are closing their final salary scheme to new employees. We have made changes to ours but in the UK we still have an open final salary scheme. We are a very, very profitable company and this (deficit) is in the context of a 1.8bn market capitalisation. That deficit is being reduced every year."

Outsourcing company Capita has limited its deficit to more than 30m after injecting more than 100m into the scheme over five years, but has admitted that an "open-ended commitment" to such top-ups is unsustainable. It has warned staff that more changes need to be made to pay-outs but said the 3,000 workers it has in this region are not thought to be affected.

Yorkshire Building Society said pension fund performance had fluctuated but it was monitoring performance and working "constructively" with the scheme's trustees over funding.

Persimmon said: "On the basis of its improved profitability, increasing margins and the significant reduction of its debt, Persimmon is fully confident in its ability to pay down its pension deficit and has an affordable plan in place to do so by 31 December 2016."

Provident Financial, whose fund's surplus decreased from 10.6m to 1m in the 12 months to June, said its defined benefit scheme had been closed to new members since 2003.