Members of the Flybe’s defined benefit scheme will not be entitled to compensation from the Pension Protection Fund, as the pension fund is based in the Isle of Man.
As first reported by The Guardian, the British Regional Airlines Group pension scheme – with some 1,350 members and a deficit of £11.6m - sits outside the pensions lifeboat jurisdiction.
Europe’s largest regional airline collapsed into administration on Thursday, due to the impact of the coronavirus on flight bookings, after struggling for months to balance its books.
A PPF spokesperson said: “We understand this must be a worrying time for Flybe employees and pension scheme members.
“The Flybe pension scheme is based in the Isle of Man under the jurisdiction of their government, which is separate from the UK government, meaning the scheme is not protected by the PPF.”
The scheme’s board of trustees had a meeting on Thursday “to make an initial assessment of the impact of Flybe’s administration on the scheme, and to determine how best to secure the scheme’s position,” said Roger Barrs, chairman of the trustees board.
Dan Mindel, managing director at Lincoln Pensions, noted there were a number of DB schemes where the fund or the principal employer is not registered in the UK, and they therefore do not qualify for protection from the PPF.
“This case, in particular, highlights the need for trustees of such schemes, especially where the sponsor is having difficulties, to consider taking the necessary steps to restructure the scheme to ensure the members have that lifeboat in case the worst happens.”
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