Members of the Kodak Pension Plan (no. 2) (KPP2) have been told by the scheme’s trustees that it is “likely” the scheme will enter the Pension Protection Fund.
In an autumn update for members of the fund, the trustees said that Kodak Alaris will not be able to support the plan long term, and so things will have to change in the future.
“The most likely outcome is that the plan will in due course move into the Pension Protection Fund,” it read, explaining that the lifeboat fund acts as a safety net for defined benefit members.
The KPP2 scheme was formed after Kodak Limited’s parent company, Eastman Kodak, filed for bankruptcy in 2012, with the company no longer able to sponsor the original pension scheme. At the time members were given the choice to switch to KPP2 or transfer into the PPF.
The trustees acquired a number of businesses from Eastman Kodak, grouped under the name of Kodak Alaris. As a result, the scheme’s sponsoring employer is a special purpose company with no trading assets, with Kodak Alaris instead being an asset of the scheme.
“While it seems likely that the plan will go into the PPF, the decision about whether that happens, and if so when, is more complicated. Over the coming weeks and months, the trustees will work with The Pensions Regulator and the PPF to make a decision,” the trustees explained. The trustees expect to let members know by December 2018.
If members do transfer to the PPF, those already receiving benefits will face no cut but could see lower future increases. For those not yet receiving their pension, they will face a cut of around 10 per cent of their current expected benefit.
The trustees also explained that members who had the choice of moving into the PPF or switching to KPP2 in 2013, are better off for being in KPP2.
“Some members have benefitted from an uplift to their benefits, others from higher pension increases. If we now move into the PPF, members will get pensions that are as good or better than the pension they would be getting if they’d move into the PPF in 2013,” the update stated.
In a statement, PPF chief executive Oliver Morley said: “The PPF has and continues to work closely with KPP2’s trustees, their advisors and The Pensions Regulator on the future of the pension scheme.
“The new Kodak pension plan was a pragmatic solution which was not without risks. Those risks have been monitored since 2013 by the trustees and The Pensions Regulator. The controls that were put in place have worked as intended. Members of the KPP2 scheme can be assured that the PPF is there to protect their benefits.”