WORKERS at a long-established Malvern company have been warned they are likely to lose their pensions.

A letter by financial advisers LEBC Group has been sent to all members of the LGG Charlesworth final salary pension scheme.

It says the scheme, which has been going at least 20 years, is significantly in deficit, with assets of £470,000 and liabilities of £1,200,000.

It rules out "mismanagement of the funds or fraudulent withdrawal" and says the deficit has three causes - returns on investment were lower than expected, the government imposed new taxes on pension funds and people are living longer.

The laws governing pension schemes say retired employees currently receiving pensions are fully protected and will continue to get their entire pensions. But this will cost about £400,000, leaving very little for members of the scheme who are still working.

"If you're not currently drawing your pension, you might receive 10 per cent of the amount originally promised," says the letter. "After expenses and tax, non-pensioners might lose all their pension. This is extremely bad news."

The letter says LEBC Group will see if a new pension protection scheme that comes into effect in April will apply. If so, members will get 90 per cent of their entitlement. However, LEBC Group admits there are no guarantees the new scheme can be applied.

The firm was founded in 1940 and is currently based in Spring Lane, making plastic mouldings.

Managing director Philippa Charlesworth said the pension fund is totally independent from the company.

Roy Tucker, of LEBC Group, said the scheme has 10 pensioners, 15 members who have left Charlesworth but are still in the scheme and four or five members still at Charlesworth.