READER’S Digest in the UK was at risk of collapsing into administration today after a funding deal for its pension scheme failed.

Negotiations between its embattled US parent group Reader’s Digest Association and the UK Pensions Regulator appeared to have broken down over an agreement for the UK title’s pension fund.

The move is understood to leave the future of around 135 jobs hanging in the balance. There are 1,600 members of its pension scheme.

The US firm announced it was delaying its emergence from Chapter 11 bankruptcy protection due to the UK pension situation.

It said funding plans had already been agreed by its UK arm and industry lifeboat the Pensions Protection Fund, but added that the Pensions Regulator had indicated it would not approve the deal.

"In light of this unexpected ruling, the UK entity is now reviewing its options in an attempt to find a solution," said the group.

It is understood that if a deal cannot be reached with the Pensions Regulator, US-based Reader’s Digest will not be able to support the UK company, leaving the British business with little choice but to call in administrators.

The British edition of Reader’s Digest has a history dating back to 1938.

It has offices in Canary Wharf, east London, and Swindon, Wiltshire.

The US parent filed for bankruptcy protection last August after battling financial difficulties as it laboured under vast interest payments on a 2.2 billion US dollar debt pile (£1.4 billion).

This has now been reduced to 500 million dollars (£314.7 million) under a restructuring plan, but it is having to cut liabilities to survive - such as the UK pension fund payments.

It is believed to have proposed injecting £10.9 million and one third of the equity of the UK business into the UK pension fund, which reportedly has a £125 million shortfall.

The Pensions Regulator was not immediately available for comment.

Reader’s Digest Association publishes 50 editions of the pocket-sized magazine and has offices in 44 countries.