Fears grow for Turner & Newall pensioners as US talks fail

Fears are growing that up to 17,500 people could see part of their promised pensions snatched away after high-level talks failed to persuade creditors holding the purse strings to hand over more cash.

Another 22,000 pensioners would also lose out through not receiving inflation-linked rises if, as seems increasingly likely, the £1bn Turner & Newall pension scheme is wound up.

British trade union representatives flew to New York this week for talks aimed at safeguarding the pensions of current and former British employees of US engineering group Federal-Mogul, which in 1998 bought Turner & Newall, a car parts firm that used to make asbestos.

The scheme has a winding-up deficit of £875m and is be ing frozen by the company's administrators. Representatives of Amicus and other unions met Federal-Mogul's principal creditors, led by billionaire US corporate raider Carl Icahn, the largest of its bondholders, in an attempt to find a formula to bail out the scheme.

But it was disclosed last night that, following what one insider called a "dogfight" of a meeting, the creditors who effectively control the company have said there is no more money. The unions said the creditors had not improved their original pre-meeting offer of a top-up payment of $130m. However, based on current exchange rates, this is now worth about £71m, slightly more than before.

Alexander Forbes, the scheme's independent trustee, rejected the original offer. It would consider whether what is now on the table is workable, said the unions. If it is judged to be insufficient, the scheme will almost certainly be wound up, resulting in as many as 17,500 current and former British employees losing up to 70% of their pensions.

"We are disappointed that a better offer was not made," said Amicus. "That was the offer already on the table."

The unions have meetings planned with the various par ties over the next few days and have appealed to members not to take any "precipitative action" until the outcome of those discussions is known.

Federal-Mogul's British subsidiaries employ 4,000 people at a dozen sites. Federal-Mogul filed for chapter 11 bankruptcy protection in 2001 after it was hit with a wave of asbestosis claims. There are several hundred British claimants.