Industry sources said the main reason for the expected shortfall was the pounds 500m cost of setting up a separate pension scheme for pensioners. The establishment of the new fund, which has been required by the Government, could absorb any surviving surplus.
The pensions issue will be debated on Wednesday in the House of Lords, where Lord Peyton of Yeovil, a former Conservative minister of transport, last week put down an amendment that would require any shortfall to be made good.
Lord Peyton's amendment on allowing BR to bid for franchises, voted on earlier this month, gained majority support, representing a serious setback for the Government.
Any shortfall in the pension fund, which, notionally, was valued on 30 April, would give rise to arguments over funding. The valuation, yet to be completed, is due to be published in the autumn.
Under current arrangements, British Rail would have to resume contributions to the fund of pounds 180m a year, adding substantially to its outgoings. Last year it made a pre-tax loss of pounds 164m.
It is not clear whether the extra cost of pension contributions would have to be borne by BR franchise bidders, which would then find it less attractive to operate parts of the network, or the Government directly.
The Government warned in January that the BR pension fund surplus in 1990 - pounds 1.4bn, according to British Rail's last accounts - was likely to have been absorbed by increases in pensions and a contributions holiday. At present the company is not contributing at all and employees only at half-rate because of the surplus.
Industry sources said the pounds 500m cost of setting up a scheme for pensioners that would be closed to new members and contributions derived from the need to shift money from shares to gilts, producing a higher income but offering less prospect of income growth.
Other factors that could affect the valuation include Budget changes to dividend taxation, which could account for pounds 250m, changes to life expectancy, which could cost pounds 100m for every year, and changes to expected investment returns.
These are reducing surpluses in other pension schemes. BT recently announced that a pounds 1.2bn surplus had turned into a pounds 750m deficit.
The BR fund is also bearing a higher-than-expected cost of pensions. In January the Government said the BR schemes - including the British Transport Police scheme - would pay out about pounds 400m in 1993. But the BR accounts show the main fund paid out more than pounds 600m in the year ending in March 1993.
The trustees have briefed peers, reminding them that the Government promised that privatisation would not undermine the security of pension scheme members.
The trustees said the Government's proposals would leave pensioners 'unprotected against any actuarial deficiency which may arise in the future'.Reuse content