BAE SYSTEMS, Britain’s biggest defence group, is poised to inject £500m into its pension fund as part of a deal with employees to plug the scheme’s £2.8 billion deficit.

The £500m payment — expected to be a mix of cash and assets, including property — would be the largest bailout of a pension plan to date by a FTSE 100 company.

BAE has offered the payment to aerospace unions and other employee representatives after long-running talks aimed at repairing its pension deficit.

In return, employees are being asked to consider proposals that would reduce benefits for scheme members. One option being studied would cut payouts to workers who take early retirement. The level of benefits paid to existing pensioners would not be affected.

BAE yesterday said it would not comment while the talks continued. “It would be inappropriate for us to do so while we are in negotiations with employee representatives,” said a company spokesman.

The injection of funds being considered by BAE highlights the growing importance of pension funding in British boardrooms.

Last month Marconi, once one of Britain’s premier industrial companies, put aside £700m of the £1.2 billion received from the sale of most of its business to Ericsson to plug the gap in its defined- benefit pension scheme.

ITV, the FTSE 100 media group, plans to put £300m into its fund. The Kingfisher retail group has earmarked £250m.

BAE is second, behind British Airways, in the table of FTSE 100 companies ranked by the size of their pension deficits in relation to their stock-market value.

As revealed by The Sunday Times last month, BA has begun talks with unions on a plan to plug its deficit, but has said it will not increase its contributions.

The BAE offer comes on top of a deal agreed two years ago under which both the company and employees boosted their contributions to the company’s schemes. Employees nearly doubled their input, from 5% to 9.3% of pay, while the company increased its payments from 11.7% to 18.2% of its wage bill.

The defence group flagged up the likely payout in its recent interim financial report. It said the pension deficit — put at £2.8 billion — was “likely to require an additional cash contribution”.

Companies with large pension deficits will be further weighed down next year when their levies to support the Pension Protection Fund (PPF), the government safety net for the pension plans of failed companies, are expected to rise sharply.

The PPF is expected to reveal how much it is seeking in levy payments from industry at the end of the month. This year it received £300m. Some experts think it could ask for more than £1 billion for next year.

Exclusive calculations for The Sunday Times by Hymans Robertson, the pension consultants and actuaries, suggest that BAE’s levy next year could be as high as £17m.

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