Hostile GKN bid ‘would hit pensions of 32,000 staff’

MELROSE’S takeover of GKN would damage the pensions i of 32,000 workers, a watchdog wa has warned.

The T Pensions Regulator, which is responsible for making sure bosses bo pay into company pension sio schemes, is concerned that increased in debt for GKN under Melrose’s plans may weaken GKN’s ability to pay into its heavily indebted scheme.

Car and aeroplane parts maker GKN’s pension fund has a deficit of £675m with about 32,000 members. The firm, which has 6,000 UK employees, is fighting off a hostile £7.4bn bid from the City turnaround group amid mounting pressure for the Government to intervene.

Bosses from GKN and Melrose as well as union Unite, which is opposed to the takeover, will be quizzed by MPs this morning.

In a letter to Work and Pensions Committee chairman Frank Field, published today, The Pensions Regulator chief executive Lesley Titcomb said she had met with both sides since the possible takeover emerged. ‘From the outset,’ she wrote, TPR had been concerned that the increased debt involved in any takeover is likely to have ‘a detrimental impact’ on payments into the pension scheme.

Titcomb said she had encouraged Melrose to apply for a formal statement from the regulator – known as clearance – which would assure pensioners that their retirement savings would not be put in danger.

Field said: ‘Melrose claims an impeccable record in protecting pension rights. The surest way to demonstrate its commitment in this case would be to apply voluntarily for clearance.’

Melrose has pledged to pay an upfront sum of £150m into the pension fund if its takeover is successful. GKN has pledged to pay £160m into the fund under its plan to split its aerospace and automotive divisions.

A Melrose spokesman said: ‘ Melrose has consistently strengthened the pension scheme covenants of the businesses that it has acquired.’