TOP York employer Nestl Rowntree warned today that jobs could move abroad if UK pension costs rise too high.

But it flatly denied reports that it is threatening to shift production of KitKats and Smarties to the Czech Republic, putting 1,600 York jobs at stake.

The company's comments came amid rising concern about the impact of the Pension Protection Fund (PPF) on the competitiveness of British business.

The fund was set up earlier this year to provide a safety net for occupational pension schemes, and administrators will shortly announce how much business will have to pay into the fund.

According to a national newspaper, Nestl has been told it may have to pay a levy of as much as £12 million a year, when it had been expecting to have to pay only about £300,000.

Nestl told the Evening Press today: "It is our belief that if UK labour costs for any manufacturer get out of line because of increased costs, including pension provision, then this could result in jobs being moved to more competitive locations.

"It would also cause companies to reconsider their current pension scheme offerings, which could lead to further scheme closures."

But a spokeswoman stressed: "We have not said Nestl may stop manufacturing KitKat and Smarties in the UK in respect of the PPF proposals."

News of the jobs threat came only days after the Evening Press, above, revealed that two major KitKat innovations - KitKat Kubes and KitKat Low Carb - had been quietly abandoned after many millions had been invested in their development and marketing.

And it comes less than three weeks after the shock departure of flamboyant managing director Chris White, with the company saying it needed to improve its business performance.

The spokeswoman Nestl UK believed a well structured pension scheme was an important part of the pay and benefits offered in the UK, and it had therefore taken a close interest in the recently emerging pensions legislation.

"We recognise the Government's concern about the effect of failing pension schemes on members.

"We agree there may be a need for some protection, and are not against the principle of a Pension Protection Fund.

"However, any such fund must be affordable and fair; business contributions to the Fund should be capped."

She stressed that Nestl UK and its parent Nestl SA had consistently stood behind the Nestl UK Pension Fund, "and this policy will not change in the future".

She said the company welcomed a recent consultation update issued by the PPF Board, and was pleased to have the opportunity to be part of the consultation process.

Updated: 09:27 Monday, November 28, 2005