Thomas Cook pension scheme not expected to enter PPF

The Thomas Cook Pension Plan is not expected to enter the Pension Protection Fund (PPF) as it is estimated that it has enough assets to provide benefits to its members in excess of PPF levels.

However, in a letter to Work and Pensions Select Committee chair Frank Field, Southern Trustees chair of trustees, Steve Southern, said that recent calculations by the appointed scheme actuary estimated that the scheme did not have sufficient assets to provide members with their full benefits.

“The plan is currently expected to have sufficient assets to provide benefits in excess of PPF levels,” Southern wrote. “This will be confirmed as part of the ongoing with of the trustees and the PPF.

“The plan's assets are not expected to be sufficient to secure all member benefits in full.”

As agreed in its 2017 triennial actuarial valuation, the scheme was to receive annual contributions of £26m from it's principal employer, Thomas Cook, until 2022 to repair its £105m funding deficit and support its long-term funding target.

Following this agreement, the trustees entered discussions with Thomas Cook over the firm's proposed restructuring.

However, as time passed it became clear that the company was in financial trouble and the trustees indicated that they would be willing to consider deferring or reprofiling the deficit contributions.

Southern noted: “The trustees acknowledged the financial challenges being faced by the group and expressed their desire to be supportive of the group where possible to assist the group to survive and prosper (balancing this against the long-term security of members' benefits).”

However, the deferral or reprofiling of the contributions did not enter detailed discussions as the firm slipped into insolvency.

“In the end, the groups liquidity issues overtook matters, and despite regular enquiries the trustees were not involved further in the discussions,” added Southern.

He also stated that the trustees had been in regular communication with The Pensions Regulator throughout the process.

Southern concluded: “The trustees are committed to ensuring that plan members are kept informed of developments in relation to the plan and how those developments may affect their benefits.

“The trustees will continue to work with their professional advisers and the PPF to ensure that all relevant information is provided to members, in accordance with the trustees' duties, law and regulation.”

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