Tinsley warns over pensions liabilities

Eliza Tinsley, an agricultural equipment components maker, has become the first company to warn that it may have to wind up one of its pension funds due to the fall in the value of the stock market.

The group yesterday said it would slash its dividend by a third in order to plug a £1m gap in the defined benefit fund created by the share-price slump.

Andrew Hall, chief executive of Tinsley, said winding up the fund "is one of several options" under consideration. Tinsley's shares fell 18 per pent to 36p.

The company is consulting 170 employees who are in the scheme over what they want to do, but is also establishing its legal position as to whether it can forcibly close the scheme.

It estimates that closure of the scheme would be a further £0.5m on top of the £1m needed to make up the shortfall in the value of underlying assets.

Tinsley's move is unlikely to be the last such warning. BT has already had to set aside £400m in extra contributions this year and most observers expect other pension schemes to be hit.

Tinsley's defined benefit scheme closed to new members in 1998. Most of its 1,700 workforce are in a separate defined contribution pension, which does not need to be boosted when the value of equities drops because the scheme makes no promise about the level of final payout.