THE bill for topping up the pensions of former employees of Motherwell Bridge has increased to around £1.3 million a year since banks put its former holding company into a controversial receivership, official figures have revealed.
Some 335 members of a plan operated by the old engineering group are getting their retirement incomes subsidised by the taxpayer under the government-funded Financial Assistance Scheme.
A spokesman for the scheme said it pays out an average £4000 to qualifying pensioners a year.
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The number of former employees of Motherwell Bridge receiving support has more than doubled in the last five years.
With hundreds of scheme members yet to reach retirement age the total cost could spiral to around £10m a year eventually.
News of the dramatic increase in the costs involved in meeting the liabilities of the former Motherwell Bridge scheme comes weeks after the business developed from parts of the group was sold for £37m.
In his Budget announcement earlier this month, George Osborne said the UK faced years more austerity to reduce the public sector deficit. The Government has spent millions helping former employees of firms that went bust leaving shortfalls on their pension schemes.
The total support bill for all the schemes operated by Scottish companies that qualify for support could reach £100m annually.
The latest figures for the Motherwell Bridge scheme could trigger fresh controversy about the actions of lenders including Royal Bank of Scotland and Bank of Scotland, which put the company into a so-called revolving door receivership in 2003.
They were seeking repayment of around £45m debts.
The receivership involved a new firm buying plum bits of the business out of Motherwell Bridge, one of the great names of Scottish engineering.
The new business did not take on some of the historic liabilities of the old group including the pension scheme.
The scheme had more than 2000 members at the time, including those who had yet to retire, but was £11m in deficit.
Following the receivership, pension scheme members qualified for help under the Financial Assistance Scheme. This will generally pay up to 90% of the pension accrued by people before eligible schemes started to wind-up.
The number of scheme members receiving payment has increased steadily since then, to 150 in 2009 and 230 in 2012.
However, the business developed out of the favoured parts of the old Motherwell Bridge, which acquired the venerable name, has prospered.
Three weeks ago, the company was sold for the third time since the receivership in a £37m deal with Cape, a stock market-listed company based in England,
The sale triggered £1m windfalls for chief executive Russell Ward and his predecessor Hugh Hayes.
With specialist skills in areas like oil and gas storage, Motherwell Bridge made a £2.2m pre tax profit on sales of £35m in 2012.
Cape bought Motherwell Bridge from the Kuwait Finance House.
The Kuwait Finance House had acquired control of Motherwell Bridge from London's JO Hambro Capital Management in 2008.
Hambro backed a management buyout led by Mr Hayes in 2006, which valued the Motherwell Bridge business at around £15m.
Mr Hayes said at the time of the 2006 buyout that it would ensure banks would recover the debts due when the old holding company was placed in receivership.
The buyout triggered a £5m payment into the pension scheme, which sold its stake in Motherwell Bridge.
After the old Motherwell Bridge was placed in receivership trustees of its pension scheme agreed to take £2.9m cash and a 24.9% holding in the reconstituted group in exchange for it being relieved of any liabilities connected with the fund.
While the old pension scheme has remained in deficit since the receivership, Royal Bank and Bank of Scotland appear to have done well out of events at the firm.
Royal Bank of Scotland will net more than £1m from the deal with Cape, for its holding in Motherwell Bridge.
The bank provided debt to support a management buyout of the MB Aerospace business in 2007.
Royal Bank provided funding for Kuwait Finance House's purchase of Motherwell Bridge, which Mr Ward has described as a "largely leveraged" deal.
Around 26,500 people in Scotland belong to schemes covered by the FAS or the successor Pension Protection Fund. It would cost £105m a year to pay them £4000 each.
There are around 2000 members of the Motherwell Bridge plan covered by FAS.
Payments by FAS are subject to an annual cap of £32,575.
Bank of Scotland was part of the former HBOS in 2003.
The Pension Protection Fund raises some of the money it needs by imposing charges on qualifying schemes.