Pension problems could close more charities

A major charity helping vulnerable people this week became the first to go bust because it couldn’t afford to meet its pension obligations.

Liverpool-based People Can – which had 250 staff and volunteers – went into liquidation on Monday after its pension deficit widened to £17m from just £11m earlier this year. But experts have warned that it could be the first of many in the not-for-profit sector to face closure because of pension legacy issues.

“I fear People Can will not be the last charity brought down by the weight of its pension scheme,” warned Malcolm McLean, pension consultant at Barnett Waddingham.

The problem is not going to go away, warned Judith Donnelly, a partner at Clyde & Co. “Many of these schemes date back several years, but the problem of managing the liabilities continues.”

Ian Oakley-Smith head of charity advisory at PricewaterhouseCoopers said: “The pressure’s mounting as other charities find it hard to secure funding for their services, let alone further funding for defined-benefit pension schemes.”