Thomas Cook schemes to undergo PPF assessment

Thomas Cook's pension schemes are set to undergo funding assessments to establish whether they will enter the Pension Protection Fund (PPF).

Thomas Cook ceased trading with immediate effect today (23 September) after last-minute negotiations aimed at saving the firm failed.

The PPF is ready to step in and safeguard Thomas Cook pension scheme members’ benefits, following the collapse of the travel firm.

The company had four DB pension schemes, which are expected to enter the PPF as the company begins to wind-up, with the pensions lifeboat ready to protect the 13,500 scheme member’s benefits.

Although there has been no formal application, it may occur during the funding assessment period. Benefits will continue being paid by trustees until the end of the assessment period.

The PPF assessment period usually lasts for 18-24 months and during this time the true funding level for the scheme will be realised. This will determine if the schemes will have sufficient assets to allow them to buy out benefits with an insurer or if they will transfer into the PPF.

There are also around 3,000 retirement members of its scheme that could continue to have their pensions paid in full by the PPF.

Unretired Thomas Cook staff in the schemes could be paid 90 per cent of their promised benefits, up to £40,000, while members with larger pensions may receive a minimum of half of their pension savings.

The PPF will assess the funding levels of all the travel firm’s schemes.

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 worrying time for all concerned."

Overall, the Thomas Cook schemes reportedly have a surplus of £100m above the levels needed to secure PPF benefits.

Prior to the firms collapse, Thomas Cook’s pension trustees are seeking assurances and incentives over a £900m rescue deal which could see shareholders and the scheme losing out.

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