Former milkmen will have a slice of their retirement savings rolled up in cheddar cheese as Cathedral City maker Dairy Crest attempts to solve its pensions pickle.
The dairy giant has agreed to offer £60million worth - 20 million kilogrammes - of its maturing cheese stock as security for its pension fund as it battles to fill the holes in its final salary scheme.
It will also pump an extra £40million into the fund, which has an £84million deficit, using proceeds from the £341million sale of its French spreads business St Hubert.
A cut of the cheese: Dairy Crest has pledged £60million worth of maturing cheese to its pension fund.The firm's final salary scheme closed to new members in 2006 and shut to existing members in 2010. It currently covers around 3,500 workers.
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The group's cheese stock is estimated to be worth around £150million and it currently pays £20million-a-year into its pension scheme.
Using its stock as security for its pension fund means that should the company go bust, pension trustees will become owners of the cheese and will be able to sell it.
It is the latest in a growing trend of companies with big pension schemes making use of their assets to protect their employees' pots, with drinks group Diageo backing its fund in 2010 with barrels of maturing whisky.
WHISKY IN THE PENSION JAR In 2010 drinks giant Diageo - owner of brands such as Smirnoff vodka and Guinness - agreed a plan with its pension fund which will see up to 2.5million barrels of maturing Scotch whisky used to help tackle its £862million pension deficit.Sainsbury's and Marks & Spencer are among the companies that have used property to back their pension funds. Sainsbury's committed £750million of its property to its pension fund in 2010, while the M&S property partnership will run until 2032, 15 years longer than planned.The pension investment at Dairy Crest - which makes its cheese in Cornwall before sending it to Nuneaton, Warwickshire, to mature - comes at the end of a reorganisation of its credit, including early repayment of £100million of loan notes.
Mark Allen, chief executive of Dairy Crest, said: 'Following the successful sale of St Hubert, we have now restructured our balance sheet, putting in place a more appropriate capital structure.
'This will reduce interest costs going forward and underpin the dividend and still gives us scope to invest to grow the business.
'We are also pleased to have reached agreement with the Trustee of the Pension Fund to improve its financial position at an acceptable cash cost to the company.'