Whitbread’s company pensions schemes, which is reported to have ballooned to more than £500million, has had to defer £40million of the planned top up payments.

Despite the company’s pre-tax profits for the year (up to February 26th) being up by 12% to £228 million, Whitbread have asked to take a pension holiday. The move was thrashed out with trustees representing the 43,000 pension scheme members and was seen as the best measure for protecting the company from difficult trading conditions.

Whitbread has said that they will be reinstating pension payments in 3 years time and has promised a figure of £525million to top-up the deficit between 2012 and 2019.

The company says that they have held their dividend policy and rescheduled the pension fund deferral as well as cutting over £100 million from their capital expenditure to ensure that the company can stay afloat in these uncertain times.

The cuts were announced just as Whitbread revealed its fund deficit to have grown from £33m to £233m, in just a year. In addition, the much larger figure of £388m was disclosed as a more realistic value of the deficit. It is estimated that the 52% that is invested in equities, has ballooned to £500m. This is the equivalent to around one third of the share value of the entire company.

In a response to the recent announcement of the company’s pension deficit, a leisure analyst with Deutsche Bank cut his price by 6% although he still gave a purchase price in relation to stock, suggesting speculation over the debt that Whitbread has amounted.

As we already talked about, the Pensions Regulator has come down on firms warning that committing fraud or dodgy practises in relation to pensions will be dealt with severely and swiftly. In light of Whitbread’s revelation, will more companies be following suit?