Leading food manufacturer Nestle has warned that it may cease production of its KitKat and Smarties confectionery brands in the UK following a spat over how much it has to pay each year to the Pension Protection Fund (PPF). The move threatens 1,600 jobs at the Nestle production facility in York.
The administrators of the PPF, which was established in April this year to pay compensation to members of eligible benefit pension schemes, are understood to be calling for GBP700 million from British businesses next month, over twice the GBP300 million that was estimated when the fund was launched.
Nestle has been told by the PPF that the risk-based levy it would have to pay could be as much as GBP12 million a year. Nestle had been expecting to pay only about GBP300,000. The group is so disgruntled by the charge that it has threatened to move production of KitKats and Smarties to the Czech Republic.
Nestle is not the only company to have complained to the PPF about the likely levy. According to industry estimates, British Airways is believed to be facing a bill of up to GBP30 million a year, and BAE Systems could have to fork out GBP17 million.