HONDA chiefs, union officials and representatives from the conciliatory service ACAS were due to meet today to discuss a pay deal at the car giant's South Marston headquarters.

Workers at the plant have rejected a pay offer of more than three per cent from the Japanese car firm and now ACAS has brought the employees' union Amicus and Honda officials around the table for detailed talks which it hopes will bring the two sides closer together. And although employees feel the offer already tabled is not good enough, no industrial action is planned.

But Honda says it cannot afford to offer more money because of the £10.2 million it is ploughing into the company's pension fund to plug a £42.5 million hole caused by falling stock market investments.

Amicus regional director Jim D'Avila said: "We will be endeavouring to highlight areas of movement that can be made without costing the company additional resources. I would be very surprised if Honda dig their heels in, and any pay increase that is negotiated will be backdated to April 1."

Last week the Evening Advertiser revealed that Honda wants to raise the retirement age of its 4,300 workforce by two years to help give it greater financial stability.

Honda has outlined a series of proposals, including increasing its own contribution to the fund by £2.5 million a year, but only if workers work beyond 60 and retire at 62.

The company wants its employees to contribute an extra half a per cent, or £5 a month, extra for the average factory floor worker, to the pension fund.