The public body British Waterways is negotiating with the government about whether it will take with it a multi-million pound pensions debt when it becomes a charity in April.
BW has an annual income of more than £200m and is in line to become one of Britain’s largest charities when it joins the voluntary sector next year. It has a recorded deficit of just under £60m in its accounts.
Asked by Third Sector to comment on the situation, David Davison, a pensions adviser at Spence & Partners, said the actual shortfall was likely to be considerably larger than shown in the latest accounts because the pension fund’s assets would have lost value as the stock market fell over the past year.
Davison said the charity’s deficit was based on its continuing as a going concern, whereas the deficit if it was wound up would be substantially larger.
"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 said 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.
A spokesman for BW said: "We’re still in discussions about what the charity will take away next April. We will receive a dowry of £500m, made up of British Waterways’ property portfolio, but there has not yet been a final decision about the size of the contract to run the waterways."
He said that a decision about the final terms for BW's independence would be made before Christmas, and an announcement about a new name and logo might be made "in the next couple of weeks".
