The Thomas Cook Pension Plan won’t be able to pay the full benefits to its members, the chairman of its trustee board has warned.
In a letter to Frank Field, chairman of the Work and Pensions select committee, Steve Southern said the defined benefit pension fund – which accounts for 95 per cent of Thomas Cook's pension obligations in the UK – is expected to have sufficient assets in excess of Pension Protection Fund levels.
However, these assets are not expected to be sufficient to secure all member benefits in full.
“The trustees are working with their professional advisers and the PPF to secure the best outcome possible for the plan’s members in the circumstances,” Mr Southern said.
FTAdviser reported in September that due to the collapse of the 178-year-old tour operator, its four defined benefit pension funds would enter an assessment period with the pensions lifeboat.
The PPF pays 90 per cent of a scheme member's benefits if they have not reached the normal retirement age of the scheme when they are transferred into the pensions lifeboat.
Mr Southern also alleged that the Thomas Cook Pension Plan had a deficit of £105m on technical provisions in its latest actuarial valuation in 2017, in contrast to figures published in Thomas Cook's annual report for 2018, which showed a surplus of £278m for the four schemes.
However, these figures were calculated for accounting purposes, a different method to the one used by the trustees to calculate the scheme shortfall.
He also said there was a deficit repayment plan in place for the DB scheme, agreed in the 2017 actuarial valuation, of £26m per year until 2022.
The trustees were open to renegotiate the agreed contributions from the company to the pension scheme amid restructuring negotiations, but these talks never occurred as Thomas Cook officials were seeking to finalise the discussions with liquidity providers and other more material financial stakeholders, Mr Southern noted.
Mr Field, who questioned the trustees on the pension scheme deficit negotiations, said: “Thomas Cook workers now face a long wait to find out exactly how much they’ve lost from their life savings, and while their former bosses might argue that this isn’t another BHS, Carillion or British Steel, they will have a hard time justifying the millions they pocketed, one eye on the door, while the company collapsed around them.
“If they’ve had a chance to check how their own pensions are affected, perhaps the high-paid executives responsible would like to bolster the retirement of some of the workers they left behind, and give some of it back?”
maria.espadinha@ft.com
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