Shares in AGA Rangemaster, the cooker and kitchen specialist, dropped as it scrapped its dividend payouts to save its pension fund.

In its interim report which was published earlier this week, the group's pension scheme said it now saw a £41.9m deficit on its balance sheet after the first six months of this year, up from a £6.8m surplus at the end of December last year.

The fund, which according to data provided by Pension Funds Online has a total of 15,347 members (including deferred members and pensioners), was already frozen to future accrual by the firm back in 2010.

Speaking to The Independent, William McGrath, AGA's chief executive said: "It's obviously not a positive to drop the dividend but it should be seen in the wider context, which is about achieving some medium-term clarity over the pension scheme."

The move to scrap the dividend is said to save the group around £500,000.

Last year the firm announced it would make annual additional contributions of £10m from 2012 with a goal to have a fully funded scheme by 2020. AGA said it will provide a £50m guarantee to the pension scheme should it still be under funded by this date.

First published 29.08.2012

azeevalkink@wilmington.co.uk