MEMBERS of the pension scheme operated by Sir David Murray's once-mighty conglomerate have been told to expect a ten per cent cut in the value of their plan.

The revelation came as trustees began the process of winding up Murray International Holdings' deferred-contribution scheme, which faces a £22.4 million deficit.

The development means there is no guarantee that plan holders still to reach 65 will receive benefits from the plan in excess of the maximum which would have been available under the Pension Protection Fund - the lifeboat for the schemes of insolvent companies.

This comes in spite of recent hopes expressed by the pension scheme's trustees and company that members would receive benefits greater than will have been provided by the state-backed lifeboat.

That prognosis stemmed from a £3.6 million payment made by the company to the scheme on August 26. This prefaced the sale by MIH of its Response call-centre company.

The trustees have now told members that "these funds are the final monies that the plan will receive from the company".

In a letter seen by The Herald, Stephen Foster, trustee for and on behalf of the MIH staff pension and life-assurance plan, said the ten per cent reduction on deferred pensions "has been necessary due to the shortfall in funding of the plan".

He said: "My earlier letters indicated that the benefits to be paid to plan members would be marginally above the level of those provided by the PPF. Where your pension has been reduced to the level of benefits provided by the PPF, the trustees are aiming to provide a 'top up' to your entitlement.

"The amount available to 'top up' pensions will only be known as the conclusion of the wind-up process, and the trustees will advise you further on this matter at the time."

The process of winding up the scheme, which began on September 30, is expected to take "a number of months" to complete, prolonging the uncertainty for pension holders.

It is understood there are about 240 members of the MIH scheme whose pensions have still to come into payment.

The trustees confirm in their latest correspondence that an agreement has been reached with a "leading insurer" to buy out the plan.

It is understood the trustees and the company are working closely with the insurer on a range of administrative tasks. They are seeking to establish factors such as the age profile and the benefit levels of each of the scheme's members. The information will ultimately determine the premium set by the insurer to secure benefits for members.

The process of selecting an insurance company has stemmed from a desire by the company and the trustees to pursue a simple solution to the deficit that did not involve the PPF, and secure as many benefits from the scheme as possible.

Mr Foster said: "As no further monies will be received by the plan and plan benefits are being out with an insurance company to the extent the assets of the plan permit, the trustees have now started to wind up the plan. Wind-up of the plan started on 30 September."

The trustees confirm that the preliminary results of the actuarial valuation of the plan showed total liabilities of £46.989 million. The assets of the plan were £24.517 million at the same date.

Mr Foster said: "All of the plan's assets have been recovered by the trustees."

The Herald first highlighted the difficulties in the MIH pension scheme in May, when it was revealed the company had stopped making additional payments to address the deficit.

MIH has since shut its headquarters in Charlotte Square, Edinburgh, following the sale of Response, its last major subsidiary, taking it closer to ceasing trading altogether.