The collapse of Waterford Wedgwood will put an extra £50 million strain on the already heavily loaded pensions industry lifeboat, experts warned yesterday.

With an estimated deficit of at least £100 million, the pottery group’s UK scheme will probably be forced to seek help from the Pension Protection Fund (PPF), which is already grappling with a £517 million deficit.

The fund was set up to take over the UK pension funds of failing British companies left stranded with inadequate assets to pay out pensions in full. It has 67 pension funds under its wing, including the huge MG Rover scheme. The collapse of Lehman Brothers in the UK, Woolworths and now Waterford Wedgwood threaten to increase its liabilities.

John Ralfe, an independent pension industry consultant, said: “It’s not an absolute disaster for the PPF, but it’s a big failure. It will certainly register on their Richter scale.”

The Waterford Wedgwood fund was roughly in balance, with assets of £225 million, in March 2007, but adverse markets and the tougher “buy-out” basis of valuation would have pushed the shortfall to at least £100 million, Mr Ralfe estimated. The PPF pays out only 90 per cent of retirement benefits for those not yet retired and caps annual payments at £27,770, which would reduce the likely cost to about £50 million, he estimated.

The PPF said it was confident that it could meet all claims, but it expected to be called upon to rescue more schemes as the recession intensified.

“Greater corporate insolvency does not change our model,” a spokesman said. “We are designed to work both in a benign environment and in a downturn.”

The PPF has £2.7 billion of assets and at present is paying out £4.8 million a month in compensation. It plans to raise its levy on all final-salary schemes only in line with inflation, but fears exist that employers will be hit with higher fees to pay for rescues.

Deloitte, Waterford Wedgwood’s administrator, said that it was too early to gauge the position of the group’s pension funds. The UK scheme is thought to have thousands of members. Deloitte was last night understood to be in talks with three potential buyers for the business in the US.

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