Field questions Thomas Cook trustee attempts to secure funding

In a letter of September 23 2019, also sent to the Pensions Regulator and the Pensions Protection Fund, Steve Southern was asked to explain the trustees’ position during negotiations to save the company. Mr Field points out that the latest annual accounts show a large surplus for the Thomas Cook scheme.

The most recent triennial valuation, in 2017, also showed a significant improvement in funding levels. This led him to ask why trustees requested £25m in ongoing annual funding for the scheme as part of the rescue deal. Earlier this month, Sky News reported that the Thomas Cook trustees had asked for an equity stake and guarantees over future contributions if it was to agree to a £900m restructuring package.

The scheme is understood to have a marginal surplus, but Mr Field asked for confirmation as to whether it has enough assets to buy out member benefits in full, or at a level above that provided by the PPF.

Finally, Mr Field asked: “How will trustees communicate with members about the long-term future of the scheme?” 

Pensions Expert reported earlier this month that the Thomas Cook schemes are marginally overfunded relative to the cost of providing these benefits, with a £100m surplus on assets totalling just shy of £1.5bn in September last year.

With PPF assessment periods typically taking between 18 and 24 months to complete and market conditions uncertain, it is unclear whether members will end up in the lifeboat, have reduced benefits bought out with an insurer, or buyout in full.

A PPF spokesperson also told Pensions Expert earlier this week: “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 defined benefit pension schemes that their benefits remain protected by the PPF at what must be a very worrying time for all concerned.”