Pension deficit forces Armstrong under

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The Independent Online

The unprecedented move was forced on Armstrong after the trustees discovered that the only way that to secure financial help from the Government's Financial Assistance Scheme (FAS) was to push the employer into insolvency.

The 3,000 scheme members may now also qualify for full restoration of their pensions if the Government bows to the recommendations in today's Parliamentary Ombudsman's report, which calls for full compensation for members of schemes that went bust before the introduction of the Pension Protection Fund.

In a statement yesterday, Armstrong said it had done everything it could to avoid going into receivership, including offering to make a lump-sum payment equivalent to the benefits that would be paid out from the FAS.

However, the pension scheme trustees rejected the company's offers, opting for the security of FAS help.

Angad Paul, the chief executive of Caparo Group, which owns Armstrong, said: "This is a bizarre world when a pension fund can access government subsidy only by closing down a successful firm and damaging its suppliers. This could not have been the intention behind the FAS.... It is a nonsense that a UK manufacturing business ... has been brought to insolvency as a direct result of an arrangement benefiting less than 4 per cent of the scheme's members, while putting at risk the jobs of our 450 employees, 250 of whom are members of the same scheme."