Field raises questions about Monarch pension

Frank Field has written to the chief executive of the Pension Protection Fund (PPF) querying the financial settlement for Monarch Airlines’ pension scheme. 

The questions surround a £7.5m secured loan note granted to the PPF by Greybull Capital, the firm which bought Monarch Airlines for £1 in 2014, and the priority it will be given over competing interests and creditors after the airline’s plunge into administration this month. 

Do we need another illustration of the ethics of some of the billionaire class in this country before we act?Frank Field

Mr Field said: “How can it be that once again, mega rich individuals could walk away from a collapsed company with a bumper profit while ordinary people pick up the bill?

“This massively supports the case for the law to change, to robustly protect pension schemes against owners seeking to line their pockets while avoiding their responsibilities, in line with our recommendations.

“Do we need another illustration of the ethics of some of the billionaire class in this country before we act?” 

Mr Field has previously been critical of the handling of the BHS pension scheme, where the collapse of the high street store meant tens of thousands of employees had their retirement incomes put at risk.

BHS went into administration in April 2016, putting workers' pensions at risk and The Pensions Regulator (TPR) has been investigating the case since.

In the end a £363m settlement with Sir Philip Green, the department store's former owner, was reached to fund a new independent pension scheme for 19,000 former BHS workers.

Greybull bought the ailing company, minus its pension scheme, for £1 from its billionaire founders the Mantegazza family in October 2014.

Before the takeover the pension scheme had reportedly been carrying a deficit of £158m.

To allow the takeover, the pension scheme was separated from the company as part of a Regulated Apportionment Arrangement (RAA) negotiated and approved by The Pensions Regulator and the Pension Protection Fund in September 2014.

The Pensions Regulator agreed to the deal as it was satisfied Monarch would otherwise have inevitably gone insolvent within 12 months.

According to the terms of the agreement, the former owners made a £30m mitigation payment into the scheme and demonstrated to The Pensions Regulator’s satisfaction all other creditors to the firm had made ‘significant compromises’ on their claims.

Greybull gave the Pension Protection Fund a 10 per cent equity stake in the new restructured business and a £7.5m secured loan note, potentially allowing the PPF to gain from any recovery in the firm’s fortunes.

The scheme entered PPF assessment in October 2014 and was fully transferred into the fund in November 2016.

Members of the Monarch scheme now receive PPF levels of pension benefit, including a 10 per cent cut to accrued benefits for deferred members and a further compensation cap limiting payments to those with the highest accruals such as the longest serving pilots.

AJ Somal, financial planner at Birmingham-based Aurora Financial Planning, said: " l think it is very important that workers who have lost their jobs are not left in the dark and are told about what is happening with their pension schemes.

“It is a difficult time for all the ex-employees and a lack of communication will only exacerbate this different period of time for them.”