Dunfermline pension fund may be rescued

Published on Tuesday 14 April 2009 21:40

KPMG, the administrator of some of the assets of the Dunfermline Building Society, has applied for the failed institution's pension fund to be taken into the hands of a state-backed rescuer.

The Pension Protection Fund (PPF) has received an application for entry from the Dunfermline's 32.8 million scheme, which was 7.16m in deficit at the end of 2007 and is now thought to have a shortfall as large as 20m.

But KPMG believes enough funds will be generated from the administration for the financial obligations to be covered without the PPF having to step in.

It is understood that the pension fund, which has 500 members, is ranked above even the mutual's depositors or the taxpayer in terms of creditor repayment due to the "unique" structure of the building society.

A source close to the administration said: "An application must be sent to the PPF, but the administrator is confident that it may not end up in the fund."

KPMG is to attempt to recover as much money as possible from a sale of some of Dunfermline's assets, but experts have warned that the 800m commercial property book has plummeted in value, while the 300m of mortgages are considered risky.

The taxpayer is owed 1.6 billion as a result of the collapse, but the Financial Services Compensation Scheme will take on around 90 per cent of losses.