Unions say they will fight pay freezes and ending of final salary schemes

Britain's largest fundraising charities have a pensions deficit of more than £1bn, prompting many to close final salary schemes and increase contributions from employees, which has sparked outrage from unions.

The shortfalls from the very biggest charities have risen from £500m in July last year to almost £800m at the end of last year, according to actuarial services company Alexander Forbes, which says that some organisations now have liabilities of more than £100m in their funds.

It says charity schemes have only three-quarters of the assets needed to meet their obligations. Ben Hall of Alexander Forbes said that charities had been hit by a "recession double whammy". The first was that their income had been affected by a fall in donations, retail sales and investments left in wills. The second was the fall in the stock market and a drop in income from government securities.

The firm says a tenth of donations could end up being used to fund pensions in some cases. Christian Aid, predicted to only have half the assets to meet its £45m liabilities, has made 80 posts redundant.

Barnardo's has a pension black hole of £141m – the largest in the survey. Peter Brook, the director of corporate resources, said it would have to find £4.6m a year for two decades to fund the deficit. "This is dependent on the pension regulator accepting our plan because usually you have half the time to pay off a pension deficit." The company also had to take into account possible public spending cuts by an incoming government "as we rely on contracts for our income. We have a number of worse case scenarios in place."

The NSPCC closed its final salary scheme to members last summer after its pensions deficit reached £50m, a sum that would have required 10% of donations to fund it.

However, unions say that their offers to help cover the costs with increased contributions went unheeded and the pension decision was imposed on them, leaving little option but to seek legal advice. "We have seen the employment contract and so it's with our lawyers and we'll see them in court," said Joe Mann, deputy secretary general of the Community union.

"We have tried to work with management but they are determined to push ahead with a restructuring plan that sees cuts in benefits and pay freezes."

Wes Cuell, director of children's services at the NSPCC, said that the pensions deficit meant action had to be taken and that millions of pounds have been saved. "We took legal advice from the biggest law firms and they said we could close the scheme," he said.

The analysis shows some of the best known names with large deficits. Cancer Research has a hole of £57m, the Royal Society for the Protection of Birds has one of £35m, Save the Children's is £45m and Oxfam is calculated as having a £49m deficit.

David Membury, of the Charity Finance Directors' Group, said charities recognised the scale of the problem and were lobbying to get exemptions from the pension regulator. "We are not companies that sell goods. Our income is donations. In law you have to fill a pension deficit within ten years but if applied strictly to our members it would mean considerably less for good causes. We need recognition that charities are different".

I am outraged at David Willetts's suggestion that baby boomers should be responsible for cutting the budget deficit of the "lost generation" of younger people (Baby boomers must pick up the pensions bill, Society, 10 February). I have been working since I was 16 in 1969; I have never had a family and claimed unemployment benefit for only two weeks – by the time I retire at 63, I will have been contributing to taxes and national insurance for 47 years. The maximum number of years in which to qualify for a full pension is 30 years. So I have already contributed an excess of 17 years.

Will I get a refund on these? I resent the fact that apparently, when I retire, having paid my way for all these years (even funding my own degree), I may be expected to use my pension to finance those whose education, health and other social benefits I will have been funding for nearly 50 years. Why should the younger generation expect the over-60s to finance their lives. I would point Willetts to Aviva's recent Real Retirement report which shows that more than one in five people aged 55 and over live on less than £750 a month. How can we spare anything for other younger, fitter and more resilient people when we can hardly afford to live ourselves? I've worked for nearly 50 years; that pension is my right.

Debbie Cameron

Manchester

• I see that yet again a self-important thinktank (Policy Exchange) has decided that university tuition fees should be raised. In my letter to the Guardian last year (24 September 2009), I argued that before we stop applicants from less-privileged backgrounds from being able to afford top universities, we ask those who benefited from free university education to finally pay their fees. Should we not be investing in the future, in human capital, and giving the unemployed youth of the country free education leading to greater social mobility?

Restricting education, or lessening the demand by raising prices, only benefits the country through lower taxes, the majority of which come directly or indirectly from the baby-boomer generation, who run and fund the thinktanks that are suggesting higher fees. This is the generation who had the entitlement to free university education. This is the same generation that caused the financial crisis and the climate crisis, and benefited from the housing boom. The baby-boomer generation believe they can fund their excessive lifestyles through taking away the privileges they received when they were young. I think it's time they paid for their mistakes, and stop forcing us to.

George Lewkowicz

London

• If David Willetts is so keen on "a fair balance between the generations", why is the Conservative party so intent on reducing inheritance tax, one of the fairest ways of spreading wealth from the one generation to the next?

Dr Sebastian Kraemer

London

I am outraged at David Willetts's suggestion that baby boomers should be responsible for cutting the budget deficit of the "lost generation" of younger people (Baby boomers must pick up the pensions bill, Society, 10 February). I have been working since I was 16 in 1969; I have never had a family and claimed unemployment benefit for only two weeks – by the time I retire at 63, I will have been contributing to taxes and national insurance for 47 years. The maximum number of years in which to qualify for a full pension is 30 years. So I have already contributed an excess of 17 years.

Will I get a refund on these? I resent the fact that apparently, when I retire, having paid my way for all these years (even funding my own degree), I may be expected to use my pension to finance those whose education, health and other social benefits I will have been funding for nearly 50 years. Why should the younger generation expect the over-60s to finance their lives. I would point Willetts to Aviva's recent Real Retirement report which shows that more than one in five people aged 55 and over live on less than £750 a month. How can we spare anything for other younger, fitter and more resilient people when we can hardly afford to live ourselves? I've worked for nearly 50 years; that pension is my right.

Debbie Cameron

Manchester

• I see that yet again a self-important thinktank (Policy Exchange) has decided that university tuition fees should be raised. In my letter to the Guardian last year (24 September 2009), I argued that before we stop applicants from less-privileged backgrounds from being able to afford top universities, we ask those who benefited from free university education to finally pay their fees. Should we not be investing in the future, in human capital, and giving the unemployed youth of the country free education leading to greater social mobility?

Restricting education, or lessening the demand by raising prices, only benefits the country through lower taxes, the majority of which come directly or indirectly from the baby-boomer generation, who run and fund the thinktanks that are suggesting higher fees. This is the generation who had the entitlement to free university education. This is the same generation that caused the financial crisis and the climate crisis, and benefited from the housing boom. The baby-boomer generation believe they can fund their excessive lifestyles through taking away the privileges they received when they were young. I think it's time they paid for their mistakes, and stop forcing us to.

George Lewkowicz

London

• If David Willetts is so keen on "a fair balance between the generations", why is the Conservative party so intent on reducing inheritance tax, one of the fairest ways of spreading wealth from the one generation to the next?

Dr Sebastian Kraemer

London

BT's plans to fix its pension deficit may not please the regulator but it's hard to see a workable alternative

A lot can happen in 17 years. Back in 1993, there was no internet and BT's adverts said: "It's you we answer to." These days BT answers in part to the Pensions Regulator and it would be understandable if one of the "substantial concerns" about BT's plan to fix its £9bn pension deficit was the length of time the company proposes to take.

The role of the regulator is to make companies face up to their pension liabilities. A decade is usually deemed the outer limit of what can be tolerated in a remedial plan. In a fast-moving industry like telecoms, there's an argument that the span should be shorter.

And, given that BT's deficit makes even British Airways' look modest, perhaps a £9bn problem (as at the end of 2008, so maybe more today) demands greater urgency. After all, if BT is allowed room to wriggle, every other company will want the same treatment. So the authority of the regulator is under scrutiny.

Yet these reasonable arguments must be weighed against the practical question of what BT can afford. There is no point in squeezing the company so hard that it is unable to perform useful functions such as providing Britain with a fibre-optic cable network, a task that would seem to require supportive shareholders, who have the unfortunate habit of demanding regular dividends.

On the face of it, the company's plan, blessed by its pension trustees, seems a reasonable compromise – £525m extra a year into the fund until 2011, rising at 3% a year thereafter.

Restrictions on what BT can do with any windfall cash from disposals will also seem onerous from shareholders' point of view.

No, £525m is clearly not enough if £9bn is the real figure and a 10-year timetable is imposed. But, short of re-nationalising BT or ripping up the pension promises, it's hard to see a workable alternative to the one BT suggests.

My pension is going down the drain while Scottish Widows dither

I have been driven to distraction trying­ to sort out some £5,000 of missing payments made to my Scottish Widows' pension via my employer's bank. I started investigating when my employer alerted me in October 2007 that Scottish Widows had returned £3,000 for the August and September payments that year.

On checking, I discovered that Scottish Widows had not only lost payments, but held on to other large payments for up to five months before returning them to the bank because they couldn't find the account number. I am losing money which should be invested for my old age, which is just around the corner, and have incurred additional banking charges.

I have provided Scottish Widows with all the data. Last June it said the only way forward was for me, or my employer, to contact the bank that made the payments and recall the money. Last September another payment went missing. RH, Horsted Keynes, West Sussex

Your pension payments travel from your employer's Danish bank via Royal Bank of Scotland which acts for the Danish bank, to Lloyds TSB which is Scottish Widows' bank. Apparently transfers between the banks take time and the references quoted by RBS have not been consistent­ which is why only some of your payments have got through and others have been delayed.

Scottish Widows acknowledges your efforts in producing tables and explanations to show what has gone wrong and agrees its own spreadsheet showed inconsistencies, including details of payments it had said were missing. It admits this is a mess and that it added to the confusion because some figures contradict each other.

It has now decided, because this case is so complicated and has already taken such a long time to sort out, that the most practical solution is to make you an ex-gratia payment, without admitting liability, of the missing contributions. It is giving you £1,846 which, with tax relief, restores the amount you have lost.

• Email Margaret Dibben at your.problems@observer.co.uk or write to Margaret Dibben, Your Problems, The Observer, Kings Place, 90 York Way, London N1 9GU and include a telephone number. Do not enclose SAEs or original documents. Letters are selected for publication and we cannot give personal replies. The newspaper accepts no legal responsibility for advice.