Pension fund assets will have lost value as the stock market fell over the last year and in a story in Third Sector Online David Davision of Spence & Partners says that the deficit was based on it continuing as a going concern — but the deficit would be substantially larger if the charity was wound up.
"It’s quite possible the real shortfall is more than £200m," he said. "If these services were being transferred to a private sector organisation, I’d guess that’s the amount the government would have to pay."
He went on to explain that it was 'unreasonable but not uncommon' for the government to pass on substantial pensions liabilities to organisations spun out from the public sector.
"In many cases", he said, "the new organisation was left with responsibility for the pensions deficit built up while it was part of government, leaving the government with no remaining liability at all."
BW, which currently has an income of over £200 million a year, is in negotiations with government about the exact financial terms of the change-over to a charity. The BW property portfolio worth £500 million will go to the new charity — but the pension deficit situation has not yet been resolved.