Boots's pension fund trustees should demand some £500 million from KKR to ensure the future of their 70,000 members' pensions, according to the man who was once in charge of the fund.

Because the takeover of Alliance Boots by KKR will rack up the company's debts, pension trustees can ask for a big one-off cash injection to protect their members against the greater risk that the company's cashflow will dry up.

KKR has said it has had "amicable and constructive discussions" with the Boots pension scheme trustees, and aims to complete the acquisition by July, but a deal has yet to be agreed.

The combined deficit of the Boots and Alliance schemes in its last accounts in Setpember 2006 was only some £83 million, but the Boots fund, by far the largest, uses assumptions on longevity that have not been updated since 2004. This means the actual shortfall is likely to be far higher, since longevity has improved since then.

The true deficit is likely to be at least some £350 million, according to John Ralfe, the former corporate finance chief at Boots, who is now an independent pension adviser.

In order to eliminate the shortfall and allow for further improvements in the longevity of pensioners, KKR ought to pump in some £500 million, he calculates in a note for RBC Capital Markets.

The fact that KKR has had to pay £11.1 billion, some £1.4 billion more than it originally planned, to secure Alliance Boots means that it will have to set aside more cash to pay off its debts and will have less cash available in future to put into the pension fund, making it all the more important the trustees squeeze the maximum out of KKR now.

Mr Ralfe said: "The trustees are in a very powerful negotiating position. KKR must win the goodwill of employees and pension scheme members, so the trustees can extract a much higher contribution than the legal minimum as the price of supporting the deal."

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