Blue chips face pounds 6bn pension hit
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Your support makes all the difference.Britain's top 20 manufacturing companies are facing bills of at least pounds 6bn to top up their employee pension funds in the wake of the removal of ACT tax credits in the Budget last week.
Larger manufacturers, whose workforces have shrunk in recent years, but whose pension liabilities remain large, are expected to be worst- hit.
ICI estimates it will have to find pounds 330m over 10 years to keep its pension fund topped up.
Rolls-Royce, British Steel and GEC are having their funds revalued to reflect the change in ACT. These three will have to make up pension shortfalls of around pounds 200m, pounds 300m and pounds 180m respectively. The deficits would be made up over several years, depending on the age of the people in the scheme, and would be charged to the company's profit and loss account.
ICI said that the shortfall would not have a significant impact on profits because of the length of time over which it would have to pay the pounds 330m. Other companies echoed this view, but maintained that even though the annual payments came in at under 5 per cent of annual profits, they still represented a significant and unwelcome outlay.
"It may not seem like much when spread out over a number of years, but this is money we could be using to invest in new technology, factories and jobs," said the finance director of one of the affected companies.
"Mr Brown has managed to take a stable situation, where we knew what our future investment plans were going to be, and create a very unstable one."
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