CAR giant Honda hopes its plans to raise the retirement age of its workforce will help give it greater financial stability.

The Japanese manufacturer, which has its factory in South Marston, needs to plug a £42.5 million hole in its pension fund caused by the falling value of stock market investments, and has suggested raising the retirement age of its 4,300 employees known as associates by two years.

Honda has also put £10.2 million into the fund in a bid to help cover the shortfall.

Spokesman Jason Gowar said the proposals, which still have to be tabled before directors, would put the scheme on a "firm financial footing for the future".

He added: "We are pleased to be able to respond to the requests of our associates to maintain the scheme. The company believes it has a responsibility to find a sustainable solution and has taken the initiative by writing to all employees."

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 their funds.

And the scheme would be closed to new employees at the plant for at least five years. Amicus is holding separate talks with Honda over a new pay deal for workers after its negotiating committee rejected an offer of 2.2 per cent. It called that "derisory", saying one per cent would be lost in National Insurance contributions with another half a per cent to the pension fund.

Amicus regional officer Jim D'Avila, said: "I would be pretty hacked off if I was asked to work to 62 the pace on the production line is fairly hectic and people in their 20s and 30s struggle, so when workers get to 60 they will be ready to retire."