UK - based hotel and restaurant group Whitbread is to siphon income from some of its property assets to plug £100m (€115.6m) of its £434m pension deficit.

In a structure arranged by Deloitte, Whitbread has formed a partnership with pension scheme trustees allowing it to retain control of its assets but provide the pension scheme with income via a stake in its hotel and restaurant portfolio.

Deloitte partner Eileen Haughey, who arranged the deal, said: "The issue is simple:  they have a big pension obligation to fund and they had to decide what they had to fund it with."

Mitigating the risk of over-funding, the adoption of flexible partnership law and legal limits on the liability of trustees make partnership an attractive option. "They're entitled to a stream of income without having to own the assets," she said.

"You can use the assets as collateral but they remain on the balance sheet and the company retains operational control. The important thing is that the assets asked to have a value irrespective of what happens to the company. In the worst case, if Whitbread were to go bust, it won't damage the value of the properties."

Whitbread said in a press statement that it expected other FTSE 100 companies to adopt a structure prototyped by retailer M&S in 2007. It follows recent similar moves from UK retailers Sainsbury's and John Lewis.

Haughey, who developed the prototype M&S deal in 2007 as head of corporate finance, said: "It took the market while to work out what we'd done."

A two-year delay between the M&S deal and wider acceptance of the structure were due to the complexity of the deal and a lengthy process of due diligence.  "Not every client was to be the first to do it," she added.

"It takes six months to implement at least and there are many stakeholders involved - both those on the corporate side and trustees. Even if trustees are keen, the process of negotiating a breach of agreement can take a long time."

She added: "This is a long-term project and you have to get it right first time if you're going to get it right for the long-term."

Deloitte is working with 10 other pension funds on similar deals to plug pension deficits collectively worth £2bn.