The financial vulnerability of US carmakers General Motors and Ford is threatening to derail the government agency responsible for paying the pensions of failed companies.

The Pension Benefit Guaranty Corporation, set up in 1974 and used as the model for the UK's new Pension Protection Fund, has been teetering for three years as its deficit deepened to $22.8bn (€18.6bn) at September 30. A US economics analyst said any defaults by the automotive sector would worsen the deficit by 35%, adding $8bn in unfunded liabilities.