A deal to sell the European arm of General Motors, which includes Vauxhall, to France's PSA Group could be terminated due to the British company's pension scheme deficit, the BBC has reported.

Referring to Vauxhall's pension scheme, one of the largest in the UK with 15,000 members, pensions expert John Ralfe said the PSA Group would not touch the scheme "with a barge pole", assuming that it has a deficit of around £1bn.

According to the company's most recent available records, at the end of 2014 the pension scheme had assets of about £1.8bn but liabilities of approximately £2.6bn, resulting in a £840m deficit.

Since 2014, record low interest rates are likely to have hit returns on government debt which larger pension schemes invest in, therefore the deficit is likely to have grown, Ralfe explained.

He also told the BBC's Today programme that the size of the deficit was "a major issue for the takeover...At best it's a stumbling block, at worst it could be a deal breaker."

Following last week's announcement that PSA was in talks over purchasing GM's loss-making European business Opel, Ralfe noted that the deal would not involve the pension scheme. And so, the French company would only take on the operating assets, including the plant and Vauxhall brand, leaving the scheme under the control of General Motors UK.

"The trouble with that is that that would then be a company with no assets, so what would have to happen... is that General Motors US would have to issue a guarantee for that UK company," Ralfe added.

However, the pensions expert speculated that Vauxhall pensioners do not need to be concerned about their position, but as politicians are "running around all over the place asking about jobs, they should also be running around asking about pensions".

Unite union leader Len McCluskey is to meet PSA Group chief executivve Carlos Tavares this week to discuss the deal and any effect it may have on jobs.

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