THE pensions crisis in the UK is set to escalate as increasing numbers of cash-strapped employers are forced to make contributions for the first time in more than a decade, experts claimed yesterday.

Almost one in four employers made no pension contributions in 2002 — maintaining a decade-long trend despite a 25 per cent slump in the stock market. Companies including household names such as Shell, Rio Tinto, Lloyds TSB and Barclays are among those that failed to make contributions. Pensions experts said that companies would need to end contribution holidays to plug escalating deficits.

Ronnie Bowie, chairman of the pensions board at the Institute of Actuaries, said: “A lot of companies are facing problems at the moment and many are having to decide between their shareholders and their pension members. But I find it disappointing that so many have, to my mind, broken the pensions partnership between employees and employers so quickly.”

Some companies insist that their schemes remain healthy and have no plans to resume contributions. These include Rio Tinto, the mining group, Royal London, the life insurer, and Barclays, the banking group. Royal London said its main scheme was 214 per cent funded, and its employees do not make contributions.

Trade unions, incensed at the number of firms abandoning final salary schemes, were last night threatening industrial action if employers that have enjoyed long pension contribution holidays start to scale back benefits for employees.

Soaring share prices in the 1990s enabled many companies — which invest 70 per cent of their funds in equities — to enjoy a contributions holiday. Union officials are furious that, now that employers face large deficits, workers will be asked to raise their contributions to help to plug the gap.

Roger Lyons, joint general secretary of Amicus, the UK’s largest private sector union, said yesterday: “A lot of companies got themselves into this position because they thought the good times would last for ever. Now they think it’s OK for employees to pay the price.”

Some employees have agreed to accept higher contributions — effectively a pay cut — to keep their pension schemes open. Yesterday, workers at British Gas and the Automobile Association (AA) agreed to pay an extra 1 per cent in pension contributions to preserve their benefits.

Aegon, the Dutch insurer, has asked some UK employees to start paying into their pension scheme for the first time. Aegon will also close the scheme to new members and resume its own contributions.

Mr Lyons added: “Because of the conditions of the stock market, in my view any employer taking a contribution holiday is extremely ill-advised and is expecting to shore up share prices and dividends at the expense of members.” He said the union would back any action, including strikes, by members defending their pension rights. The GMB union is calling on the Government to force employers to make 10 per cent contributions to pension funds, with employees paying in a compulsory 5 per cent of their salary.

A TUC official said: “It’s surprising that so many companies are still on contribution holidays given the current investment climate.”

Pensions experts fear that the next round of triennial pension fund valuations, due at many companies in the spring of this year, will expose the funding gaps at many of the companies that have previously enjoyed long contribution holidays. Paul Greenwood, partner at Mercer Human Resource Consulting, the actuaries, said: “Most of the people in contribution holidays will not be in them after the next valuations.”

Barclays commissioned an interim actuarial review in September last year, which found a £400 million surplus in its £12.3 billion fund. But under the FRS17 accounting standard, which takes a snapshot of the fund, the scheme has a deficit of £1.3 billion.