The fallout from the liquidation of Thomas Cook looks certain to now threaten the financial future of all ex-employees, with the potential entry of Thomas Cook’s defined benefit pension schemes to the Pension Protection Fund (PPF).
While thousands of staff in the UK and abroad face redundancy, they and tens of thousands more ex-employees with preserved pension benefits under their former employer’s scheme now face a stressful time as they wait to find out about the security of their long-term benefit packages.
Despite the Thomas Cook schemes being amongst the best-funded pension schemes in the UK, showing a funding surplus of £278m in the last accounting year, the effect of the collapse of its parent and sponsoring firm means it now faces an uncertain future. Thomas Cook’s four defined benefit pension schemes are expected to apply for protection under the PPF in the coming days, meaning its thousands of members face having their benefits cut, at best, throughout their retirement years. PPF cuts include an annual income cap and limitations over inflationary increases and death benefits.
The security of the Pension Protection Fund (PPF) has been under scrutiny in recent years, and its potential new liability over the £1.1bn Thomas Cook pension book poses further questions about the security and longevity of this privately-run pension scheme insurer.
If you have been affected by the recent announcements, or have concerns for your own pension scheme, contact us to speak directly to a UK qualified and regulated Pension Transfer Specialist about your options.