Cheese used to plug pension shortfall

The Momentum UK Team 19 April 2013

A giant stockpile of maturing cheddar cheese is to be used as an insurance policy for a pension fund.

A total of 20 million kilos of cheese will be used to back up a pension scheme for workers of Dairy Crest, the UKs biggest cheesemakers.

It is thought that around 20,000 pallets of cheese, which accounts for nearly half the company's entire stock, has been pledged as an insurance for pension fund trustees.

The cheese is made in Cornwall, but matured in a warehouse in Warwickshire where it is kept under special atmospheric conditions for twelve months.

It is intended that trustees will be able to sell sections of the cheese stockpile in an attempt to reduce the chances of a pension shortfall if the pension fund runs into further financial difficulty.

The financial troubles of the manufacturer has stemmed from a recent increase of retiring milkmen. In previous years many UK households had their milk delivered daily, whereas a change in consumer habits has created uncertainty over the future of the pension fund.

Considering that the majority of the schemes 3000 members are milkmen the combination of a loss of revenue with an increase in retirees has caused financial uncertainty. The scheme is now closed.

This technique of using a food produce to back up a pensions deficit is not unheard of. In 2010, the drinks company Diageo exercised a similar technique to plug a shortfall in its pension scheme.

During this time they agreed to transfer millions of barrels of maturing whiskey into a pension fund partnership in an attempt to reduce a deficit.

In addition to the use of cheese, Dairy Crest is also paying £40 million in cash into the pension fund generated through the sale of its St Hubert Spreads last year.