South Essex workers have been assured that their company pensions are safe, in spite of a funding gap that could yet exceed £10bn.

New figures have revealed that the economic downturn has lead to a shortfall between the current value of pension schemes run by some of the country's top companies and the benefits eventually due to their members is now more than £6bn, and likely to keep rising.

One of the largest shortfalls - a massive £776m - is being faced by BAE Systems, which employs 1,400 people at the Basildon headquarters of its avionics division.

Marconi, which also employs hundreds of people around Essex, has a funding gap of £136m.

The deficits have been declared under the Government's controversial new FRS17 accounting standard, which requires companies to include details of the current assets and liabilities of their schemes on their balance sheets.

Opponents claim that the result is just a snapshot of the scheme at a particular moment and the current weak economy means they give a false impression.

BAE Systems spokesman Phil Soucy said: "This will have zero effect. We are very aware of our responsibilities and no one's pension is at any risk whatsoever, period.

"It is just a snapshot, and obviously if you manage to do it just after September 11, things will not look as good as they would at another time."

Ian Reynolds, Billericay-based pensions expert and board member of the Institute of Actuaries, urged employees not to panic, insisting that the shortfalls will soon come down once the stock market picks up.

But he did warn that the current problems could strengthen the current trend away from guaranteed final salary schemes in favour of guaranteed contribution schemes, which have a far less predictable outcome for the retiree.

Published Wednesday, March 13, 2002