Failed wholesaler has an £80m hole in pension fund

RETIRED workers at collapsed wholesaler Palmer & Harvey could see their nest eggs shrink after the firm’s pension fund was revealed to have an £80m black hole.

The final salary scheme for thousands of former staff has been threatened after the business ran out of cash and called in the administrators.

The firm is Britain’s fifth-biggest private company and the number one delivery supplier of goods to 90,000 shops, including Tesco.

P&H’s most recent accounts show a pension deficit of £5.3m but the Mail understands the current estimate is about £80m. The huge gap means it is likely the Pension Protection Fund – set up in 2004 by the Government to bail out insolvent final salary schemes – will be asked to step in, sources said.

The P&H final salary scheme shut for future savings in 2013. The pensions of about 2,500 current and former employees are thought to be affected. The defined contribution scheme is not affected.

A Pension Protection Fund spokesman said: ‘We expect that the pension scheme will enter the PPF assessment period, and members can be reassured that we are there to protect them.’

even with a bailout scheme, members may get cuts of about 10pc to retirement incomes.

P&H appointed administrators at PwC on Tuesday. Some 2,500 staff were told they had lost their jobs immediately, with 900 more waiting to learn their fates. The collapse came as a shock to many employees, clients and suppliers who had hoped a rescue deal would succeed.

Tracey Crouch, MP for Chatham and Aylesford, said she had been helping former P&H staff in her constituency where two of its depots are based. She added: ‘I was absolutely devastated when I heard the company had gone into administration. There is never a good time to lose your job, but four weeks before Christmas is just terrible.’

Bosses had been in talks with US private equity firm Carlyle Group for several months about a takeover, with loans and credit agreements from tobacco firms Imperial Brands and Japan Tobacco International keeping it afloat. However, the discussions continued for longer than expected, putting further strain on P&H’s finances.

When a fresh cash injection was needed in november to keep it going, Japan Tobacco was unwilling to continue providing assistance. The company insists it ‘worked continuously to facilitate a constructive solution’.

PwC said it was now in the process of winding down most of P&H’s subsidiaries but would try to find buyers for its van sales, sweets and snack businesses.

Big retailers such as Tesco, Coop and Costcutter have said they will switch to other providers.