The MG Rover group pension funds now look likely to be bailed out by the Government's new Pension Protection Fund.
The leading independent trustee of the two schemes, Chris Martin, said he expected confirmation that they will be taken on by the PPF within the next few weeks.
But he revealed that pension entitlements were being scaled back now in advance of entry into the fund, which pays a maximum of 90 per cent of an individual's pension.
Mr Martin said the trustees were still in negotiations with Rover's former owner, Phoenix Venture Holdings, in the hope that it will pay further amounts into the schemes.
However, it was unlikely that money retrieved from Phoenix would come anywhere near filling the £495 million gap in the schemes' books.
"We are now informed that we are very close to having both schemes entered into the Pension Protection Fund," he said.
"We need to conclude our discussions with Phoenix Venture Holdings over the amount of debts they pay to the schemes.
"Once that is concluded and the debts paid, we understand the Government will clarify the entry requirements for the PPF and we will be able to enter the PPF from September or October."
Explaining the reductions in payouts under the scheme, Mr Martin said: "We needed to adjust the payments anyway, because the way the law works, we have been overpaying them since April, when the scheme was wound up."
The PFP itself yesterday spelled out exactly how the scheme will work and stressed that companies in danger of going bankrupt or whose pension schemes are underfunded will have to contribute more.
It said it wanted to introduce a risk-based levy as early as possible during the 2006/07 financial year.
But it stressed that the amount firms had to pay would be capped at a fixed percentage of their liabilities to limit the potential impact on weaker companies.
The PPF's board said a scheme's level of underfunding would be measured by looking at the difference between the value of its assets and the liabilities it would pass on to the PPF if it went under.
The risk of a company becoming insolvent over the year ahead would be assessed by a credit agency.
The scheme, however, is likely to cost more than the £300 million a year estimated by the Government.
PPF chairman Lawrence Churchill said: "The Pension Protection Fund is keen to build on the broad industry support for the introduction of the risk-based levy.
"We are aware of concerns about the potential financial impact that the levy may have on schemes and their sponsoring employers, and are therefore proposing to cap the amount of risk-based levy payable by individual schemes."
The CBI welcomed the news that the risk-based levy would be introduced next year.
Deputy director-general John Cridland said: "The principle that businesses representing the highest risk should be asked to pay more has to be right.
"It would have been unfair for strong companies with well-funded pension schemes to subsidise others.
"But companies remain worried that the costs of the scheme, already a significant burden, could escalate beyond the predicted £300 million a year." n About 5,000 redundant Longbridge workers could get extra state payouts of about £2,500 each after administrators said they would not oppose an application by unions for a special protective payment on the grounds that the company laid off more than 100 people without giving 90 days notice.
Application for the awards will be made at an industrial tribunal later this month.
