25 September 2019
As trustees of the A.T. Mays Limited Pension and Life Assurance Scheme, the Inspirations Group Pension Scheme and the Sun International (UK) Limited Pension and Life Assurance Scheme) “the schemes”, we are saddened that Thomas Cook Group plc and associated companies “Thomas Cook” entered compulsory liquidation on 23 September 2019. Thomas Cook was helping fund our schemes.
It’s important that we point out a number of matters at the outset of this letter as we know this is a worrying time for you, our 600+ members:
- We are trustees of the schemes on the Thomas Cook Travel Pension Trustees Limited (TCTPT) board. However, all assets/monies within the schemes are held and looked after by the trustees. Thomas Cook and their administrators do not have any access to the assets we hold.
- The planned merger with the Thomas Cook Pension Plan (TCPP) will not go ahead. That merger was taking place to streamline administration, save money and improve member benefits. TCPP is undertaking a similar communication to its members.
- Your trustees remain focused on protecting the accrued benefits of the members of the schemes and are in continual dialogue with a number of parties including the Pension Protection Fund (PPF) and The Pensions Regulator (TPR) to agree next steps. That work is already under way following a trustee meeting held on Monday 23 September.
This is the first of a number of communications you can expect from us. It is also the start of a process that will lead to a number of changes to the governance and functioning of the schemes.
What happens now
The schemes are now expected to go into the formal PPF assessment process. The PPF acts as a safety net for members of defined benefit pension schemes like ours in the event the sponsoring employer(s) becomes insolvent. It protects members if their scheme is unable to afford at least PPF compensation levels.
The assessment process will review the schemes along with their assets and expected liabilities to ascertain what level of pension benefits the schemes will be able to pay in future. The schemes are reasonably well funded and we hope will be able to pay benefits at least at the levels guaranteed by the PPF. But we cannot be sure until the process is concluded.
The PPF assessment process generally lasts between 12 and 24 months. During this time members' benefits will be paid in line with PPF compensation levels. At the end of the process, the schemes will either transfer into the PPF, which would then be responsible for paying benefits to all members in line with PPF levels of compensation or, if funding levels are deemed to be sufficiently high, the schemes may be able to secure benefits at or in excess of PPF levels through an insurer.
Benefits secured prior to the Assessment Date (23rd September 2019) – the day the scheme starts its assessment period – will continue to be paid during the assessment period as normal, although these benefits will be in line with PPF compensation levels.
Retired members over their Normal Pension Age (NPA), members who retired on the grounds of ill health, and dependant members in payment at the Assessment Date will continue to receive their pension in payment in full but with lower levels of future pension increases.
Members receiving pensions who had not reached their NPA at the Assessment Date (this includes those members who had retired early) will have their pension adjusted to 90 per cent of the pension in payment immediately before the assessment date.
Members who retire during the assessment period will receive their full pension if their NPA was before the Assessment Date, otherwise members who were below their NPA at the Assessment Date generally receive 90 per cent of their entitlement but adjusted for retiring early if applicable.
Some members may also be affected by the PPF compensation cap, which is the statutory limit that applies to the amount of compensation the PPF can pay to some members. These conditions apply if you are under NPA at the Assessment Date.
Death benefits payable to spouse’s and eligible dependants are also restricted during the Assessment Period. Generally, death benefits payable will be based on 50% of the pension currently in payment. No lump sums are payable on death during the Assessment Period.
Any adjustment to pensions will be effective from the Assessment Date. Because it may take a little time for the trustees to process the necessary adjustments, any over-payments since the Assessment Date will need to be recovered by the trustees during the Assessment Period. If you are affected in this way, we will notify you individually.
Defined Contribution members
A number of our members have funds accrued in the Defined Contribution section of the AT Mays Scheme, or hold Additional Voluntary Contributions within one of the schemes. The PPF does not cover Defined Contribution style funds and these will need to be discharged from the schemes into another pension scheme or into individual pension policies. If you have Defined Contribution funds the trustees will write to you separately on these funds.
Transfer values in respect of final salary benefits can no longer be paid from the schemes (other than in cases of divorce) unless the transfer value offer had been accepted in full by the member and all the necessary acceptance paperwork had been returned prior to 23rd September 2019. Any members affected will be contacted individually as other conditions may also now apply.
As we said at the start, the planned merger of the various pension schemes sponsored by Thomas Cook will not take place. Each will go through the PPF assessment period individually.
Winding up lump sums
Because the merger will not take place, winding up lump sums and trivial commutation lump sums will not be paid. If you were receiving a pension, it will instead continue to be paid as described above. However, as part of the eventual process for winding up the schemes, these options may be made available again at a later date.
The Trustees will be in regular contact with all members over the coming months to keep you informed with progress and other key information. Please read the communications as they come through and if you do have any additional questions then you can contact the scheme’s administration team (who act on behalf of the Trustees) as follows:
Call: 0117 927 8503
Post Handling Centre
JLT Benefit Solutions Ltd
St James’s Tower
7 Charlotte Street
Again, for absolute clarity, the assets of the schemes are separate from Thomas Cook Group plc and associated companies. This means that the insolvency practitioners have no access to this money. The administration process and the involvement of the PPF is a process that is expected to take many months.
We recognise this is an unsettling time, but rest assured we have taken all the necessary steps and will do in the future in your best interests, and we will keep you fully informed throughout the process. What we’ve provided in this letter is, we hope, enough to reassure you that all the necessary steps have been taken thus far and will be taken in the future.
Chair of the Thomas Cook Travel Pension Trustees Limited
If you’d like more information about the PPF:
● Visit www.ppf.co.uk
● Call 0330 123 2222
● Text phone 0845 600 2542
● Email firstname.lastname@example.org
Please note that the PPF does not hold specific scheme membership details and cannot comment on your individual case. They will be unable to help you if you contact them directly to ask about your personal circumstances, however, they will be able to assist you if you have general queries about the PPF.
Pensions Advisory Service
The Pensions Advisory Service also offers useful information for members. They can be reached at https://www.pensionsadvisoryservice.org.uk/ or you can call them on 0800 011 3797.