£160 million has been spent by Dairy Crest, the milk and cheese supplier, for buying an insurance policy that covers pension liabilities to its retired staff.

The policy, with Legal & General will diminish Dairy Crest's financial burden of paying out pensions to its 6,800 retired workers.

Earlier, in December Dairy Crest insured the pension payments to half of its workers who had retired before last August. Under this insurance policy every £1 paid out by Dairy Crest's pension scheme will be matched by a £1 payment into the fund by L&G. Many other companies such as Unilever, Fujitsu and Friends Provident, have shut their schemes to new joiners.

Dairy Crest too closed its scheme to new joiners in 2006. At present, nearly 3,370 of Dairy Crest's 8,100 employees are enjoying its pension scheme, which had assets of £516 million at the end of March.

But at the same time, the scheme faced a deficit of £63 million in its ability to make long-term pension payments. Mercer acted as Dairy Crest's investment consultant, while KPMG advised the company and its pension trustees.

David Felder, chairman of the trustees, said the move would trim down the fund's overall risk exposure.

David Felder further stated, "We will continue to work closely with the company to enhance the security of members' benefits."

It is worth mentioning here that only last month the firm sliced company's dividend by 25 per cent so that it could invest in the firm's brands.