LIFEBOAT FUND ON ALERT FOR VAUXHALL
VAUXHALL: PPF poised to step in to protect pensions
By Tracey Boles, City Editor
THE Government’s pensions lifeboat fund is monitoring events at Vauxhall in case efforts to save its parent company, GM Europe, fail and it has to bail out the firm’s British pension schemes.
Canadian car parts group Magna and its partner, Russian bank Sberbank, are in negotiations to take over GM Europe, but the deal is in some doubt as the German government is still looking for other offers for the firm.
GM Europe owns Vauxhall and Opel, its German sister company.
Due to the uncertainty over the future ownership and viability of Vauxhall, it is understood that the Pension Protection Fund is poised to step in to protect the pensions of the car firm’s British employees.
The PPF takes on the pension schemes of companies that go under and ensures that workers receive their retirement benefits.
A PPF spokeswoman said they were not aware of any insolvency event occurring at Vauxhall yet.
Vauxhall has 10 defined benefit schemes, one of which is still open to new members.
The schemes are worth a total of £2.2 billion in assets and cover several thousands of current, former and retired Vauxhall workers.
Earlier this month, GM Europe officials claimed that neither the collapse of its US parent into bankruptcy protection or the Magna deal would affect its pension schemes.
The PPF was set up in 2005, and fears are rising about the state of its finances due to the growing number of schemes it has had to take on as more companies collapse.
According to independent pensions consultant John Ralfe, this year’s collapse of telecoms equipment manufacturer Nortel, retailer Woolworths and Waterford Wedgewood, will result in the PPF’s deficit doubling to £1 billion.
Pensions have been one of the sticking points in negotiatons between GM Europe and its suitors. They have discussed who will carry the estimated E4 billion of risk in pension debts should Opel file for insolvency.
Magna and Sberbank should know by mid-July whether they will complete their takeover of Vauxhall and Opel.
Ever since Magna was announced as the preferred bidder, the German and UK governments have stoked suggestions that another company could still out-bid Magna.
Many viewed this as political manoeuvring, in a bid to persuade Magna to minimise job losses.
But rival bidders that could be waiting in the wings to see how the talks progress include Fiat and Beijing Automotive Industry Corp.
Fiat walked away from a bid for Vauxhall when cash strapped GM, which has since filed for bankruptcy protection, demanded more money upfront.
