On the go:The overnight insolvency of airline Thomas Cook means members of its defined benefit pension scheme are set to transfer into the Pension Protection Fund’s assessment period.
Talks to save the company collapsed on Sunday night, leaving travellers stranded and also posing a potential threat to members getting their full benefits.
The PPF guarantees the majority of a member’s pension in the event that a company is liquidated. All non-pensioners, however, see their benefits reduced to 90 per cent with typically lower increases, while wealthier members can be affected by a cap on total compensation.
The Thomas Cook schemes are marginally overfunded relative to the cost of providing these benefits, with a £100m surplus on assets totalling just shy of £1.5bn in September last year. With PPF assessment periods typically taking between 18 and 24 months to complete and market conditions uncertain, it is unclear whether members will end up in the lifeboat, have reduced benefits bought out with an insurer, or buyout in full.
A PPF spokesperson said: “Following the confirmation that Thomas Cook has gone into liquidation we await notification that the associated schemes have entered PPF assessment. We want to assure members of Thomas Cook’s DB pension schemes that their benefits remain protected by the PPF at what must be a very worrying time for all concerned.”
Trustees of the Thomas Cook schemes have also been involved in talks to save the airline, as creditors of the company. Earlier this month Sky News reported that trustees had asked for an equity stake and guarantees over future contributions if it was to agree to a £900m restructuring package.
Pensions Expert understands that the PPF and the Pensions Regulator had been involved in the talks.
