UK – The trustees of the threatened 1.2 billion-pound (1.8 billion-euro) T&N Retirement Benefit Scheme have met the government to seek information about financial assistance.

The affair has hit the headlines after Kroll, the administrators of T&N’s US-based parent company Federal Mogul, applied to the High Court to wind up the massively underfunded pension fund – a move which could affect thousands of employees and beneficiaries.

Federal Mogul is currently in Chapter 11 bankruptcy protection in the US after T&N – which it bought seven years ago - was hit by asbestos-related claims.

“The meeting was because the trustees wanted to make us aware of the situation and ask about our financial assistance scheme,” said a DWP spokeswoman. The government is in the process of setting up a 400 million-pound pension compensation scheme.

“As you know the government's position remains that final decisions on eligibility for the scheme will be made in the light of further detailed work and consultation with interested parties,” the DWP spokeswoman added.

“We will be issuing guidance to trustees on wind-up in the near future. However we are saying to schemes that if they are in the wind-up process they shouldn't delay it, they should continue as normal.”

The scheme trustee, Alexander Forbes Trustee Services, said its “sole responsibility is towards the active, deferred and retired members of the scheme”.

Managing director Tim Culverhouse said: “We will leave no stone unturned in our endeavours to protect the members’ interests, and if, as sadly looks a possibility, the scheme’s assets are insufficient to meet its liabilities, we will take every action possible to secure additional protection for members under the government’s financial assistance scheme and pension protection fund.”

The scheme currently has assets of 969 million pounds – with 2,531 active members and 35,230 deferred members and pensioners.

Alexander Forbes said that under the government’s “full buyout” regulations, the scheme, should it go into wind-up, currently has a deficit, there is an actuarial valuation in progress and it would be wrong to speculate on the amount of the deficit until this has been completed.

It said the move by Kroll – which is merging with Marsh & McLennan, the parent of pensions consulting firm Mercer and asset manager Putnam Investments, put the future of the scheme in “further doubt”.

Unions have expressed their fury at the decision. “Once again UK workers are losing out because of our antiquated and unfair laws on insolvency,” said John Rowse, national secretary for manufacturing at the T&G union.

Kroll said it has a “duty to seek to balance the rights of pension scheme members with those of other creditors, including those with asbestos personal injury claims”.

It estimated scheme funding “at or about” the full Minimum Funding Requirement level. “However, if the pension scheme's liabilities are calculated on the basis of needing to purchase annuities for all members -known as the 'buyout basis' - this shortfall is estimated to be substantial.”

Kroll added: “It is the sheer size of the estimated buyout deficit that makes attempts to resolve the issue of the T&N Pension Scheme such a challenge.

“As well as maintaining the balance between all creditors, this action protects the interests of those employees who are members of the T&N pension scheme.”

“We wish to make it clear that the scheme is still open - it hasn't terminated nor is it currently subject to winding up - and we continue to hold discussions with all parties who have an interest in the future of the pension scheme to consider what the next steps should be.” It aimed to set up a replacement defined contribution scheme.