Toys R Us has agreed to pump £9.8m into its pension fund – staving off a crisis that threatened to bring the UK arm of company down.

The deal struck with the Pension Protection Fund gives the 3,200-strong workforce breathing space – although it does still look like some stores will close and hundreds of jobs lost.

The PPF said the payment was composed of £3.8m in 2018, with a further £6m promised over 2019 and 2020.

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The retailer‘s staff pension scheme has a deficit of more than £25m, and the PPF rejected the company’s earlier offer to inject £9m, throwing into doubt whether a rescue plan could be enacted.

Malcolm Weir, of the PFF, said: “This offer goes a long way to addressing the PPF’s concerns and in de-risking the pension scheme, offering greater protection for the current and retired members in the pension scheme.”

The retailer, which has 105 stores in the UK, has proposed a company voluntary arrangement (CVA), which is a step short of going into administration.

But it needed the support of the PFF to push that through – without it, there was a real risk to the whole UK business.

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Under its CVA plans, Toys R Us has proposed to close at least 26 loss-making UK stores, a move that could see 800 jobs lost.

But it would also give the company time in which to settle it debts with creditors and continue trading.

Steve Knights, managing director of Toys R Us UK, said: “The vote in favour of the CVA represents strong support for our business plan and provides us with the platform we need to transform our business so that we can better serve our customers today and long into the future.

“All of our stores across the UK will remain open for business as normal until spring 2018.

“Customers can continue to shop online and there will be no changes to our returns policies or gift cards across this period.”