Following the collapse of Thomas Cook, staff, the public and MPs have called for senior Thomas Cook executives to return their bonuses to help fund the travel operator’s pension funds. 21,000 people worldwide lost their job as a result of the collapse and it is currently uncertain what will happen to the pensions of UK employees.
Stuart Price, Partner and Actuary at Quantum Advisory, gives his thoughts: “Thankfully many of the Thomas Cook defined benefit (DB) pension schemes are in a much stronger position than the likes of BHS, Carillion, British Steel and Toys R Us when they collapsed. The schemes appear to be relatively well-funded and some should not need to enter the Pension Protection Fund (PPF).
The PPF is basically a safety net for schemes which have insufficient funds to cover their outgoings when a firm becomes insolvent.
“While this is good news for members of these schemes and they will certainly receive more than the PPF offers, it is unlikely they will receive the full benefits they were expecting.
“Whether the Thomas Cook executives will pay back their bonuses is questionable. Any extra contribution to the schemes will obviously mean a bigger increase in the amount members receive, albeit a relatively small increase when shared out. In the case of BHS, Philip Green was under significant pressure from the Pensions Regulator (tPR) and did agree to pay a substantial amount to the company’s pension scheme. This was, however, different circumstances to the current Thomas Cook scenario.
“Overall, I appreciate the devasting impact that this has had on staff who have lost their jobs with little warning, but if there is one good thing to come out of it, it is that they will still get a decent, albeit not full, pension for the service they have done to date.”
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