Barnado's expects that it will have to cut back on charity projects and consider making staff redundant as a result of the Pension Protection Fund (PPF).
The children's charity believes that as a result of the risk-based levy, it will have to pay around £4.5m. Its pension fund is estimated to have a deficit of around £68m.
Ian Theodoreson, corporate resources director at Barnados, said that there was no way it would be able to afford to pay this amount to an insurance fund. As a result of keeping its defined benefit (DB) scheme open, it may have to scale back its charity work, leaving children in need.
Theodoreson added that it would have to consider how it would provide pensions to staff in the future.
The PPF, which has been designed to protect members of DB pension schemes if their sponsor goes bust, is expected to move from a flat charge to a risk-based levy in 2006/07.