Charities face pensions crisis with shortfall of £1bn

Britain's largest fundraising charities have a pensions deficit of more than £1bn, prompting many to close final salary schemes and increase contributions from employees, which has sparked outrage from unions. The shortfalls from the very biggest charities have risen from £500m in July last year to almost £800m at the end of last year, according to actuarial services company Alexander Forbes, which says that some organisations now have liabilities of more than £100m in their funds. It says charity schemes have only three-quarters of the assets needed to meet their obligations. Ben Hall of Alexander Forbes said that charities had been hit by a "recession double whammy". The first was that their income had been affected by a fall in donations, retail sales and investments left in wills. The second was the fall in the stock market and a drop in income from government securities. The firm says a tenth of donations could end up being used to fund pensions in some cases. Christian Aid, predicted to only have half the assets to meet its £45m liabilities, has made 80 posts redundant. Barnardo's has a pension black hole of £141m – the largest in the survey. Peter Brook, the director of corporate resources, said it would have to find £4.6m a year for two decades to fund the deficit. "This is dependent on the pension regulator accepting our plan because usually you have half the time to pay off a pension deficit." The company also had to take into account possible public spending cuts by an incoming government "as we rely on contracts for our income. We have a number of worse case scenarios in place." The NSPCC closed its final salary scheme to members last summer after its pensions deficit reached £50m, a sum that would have required 10% of donations to fund it. However, unions say that their offers to help cover the costs with increased contributions went unheeded and the pension decision was imposed on them, leaving little option but to seek legal advice. "We have seen the employment contract and so it's with our lawyers and we'll see them in court," said Joe Mann, deputy secretary general of the Community union. "We have tried to work with management but they are determined to push ahead with a restructuring plan that sees cuts in benefits and pay freezes." Wes Cuell, director of children's services at the NSPCC, said that the pensions deficit meant action had to be taken and that millions of pounds have been saved. "We took legal advice from the biggest law firms and they said we could close the scheme," he said. The analysis shows some of the best known names with large deficits. Cancer Research has a hole of £57m, the Royal Society for the Protection of Birds has one of £35m, Save the Children's is £45m and Oxfam is calculated as having a £49m deficit. David Membury, of the Charity Finance Directors' Group, said charities recognised the scale of the problem and were lobbying to get exemptions from the pension regulator. "We are not companies that sell goods. Our income is donations. In law you have to fill a pension deficit within ten years but if applied strictly to our members it would mean considerably less for good causes. We need recognition that charities are different".