Thomas Cook’s pension funds have kicked off talks with specialist insurers about a deal to salvage the collapsed travel group’s retirement scheme benefits.
Sky News has learnt that Steve Southern, chair of the trustees, is holding talks with several parties about a buyout deal that would avoid most of Thomas Cook’s 14,000 pension scheme members facing a steep cut to their payments.
Any deal with an insurer would be likely to involve a more modest cut to payouts than the 10% triggered by a pension scheme’s transfer into the Pension Protection Fund (PPF) lifeboat.
The discussions are at a very preliminary stage and – even if successful – will not result in a deal until after the Thomas Cook schemes have been through an assessment by the PPF.
That period could take up to two years, and if the schemes do enter the PPF will result in roughly 10,000 future pensioners having their payouts cut by 10%.
Sources said that a number of pension risk transfer specialists, as well as at least one of the new “superfund” consolidation vehicles, were in talks with Thomas Cook’s trustees about a deal.
News of the trustees’ efforts to secure members’ benefits comes four days after Britain’s oldest tour operator ceased trading, sparking an international repatriation programme and triggering thousands of job losses.
Thomas Cook’s descent into insolvency has sparked a bitter blame game, with board members, government ministers and auditors all facing demands to explain their actions in the months before its collapse.
The company’s four pension schemes are well-funded, with a £100m surplus on a PPF basis, according to the latest figures.
Collectively, they hold assets worth about £1.5bn.
However, as Sky News revealed last month, the trustees’ demands for better terms in Thomas Cook’s proposed rescue deal added a further complication to efforts to get the transaction across the line.
Thomas Cook’s liquidation brought to an end 178 years of solvent trading, prompting the launch of inquiries by the government’s Insolvency Service, the accounting watchdog and an influential committee of MPs.
Ministers have established a taskforce to address the crisis, which has left creditors facing meagre returns from the post-insolvency sale of assets.
To date, just under half of Thomas Cook’s overseas British customers have been flown home.
Its collapse came hours after Thomas Cook issued a last-gasp plea to its lenders to reduce a £200m funding demand.
The talks, which concluded without a deal on Sunday evening, represented a frantic last throw of the dice for a company which had been forced to seek more than £1bn in new funding following a £1.5bn half-year loss and deteriorating trading.
Thomas Cook was founded in 1841 by a 32-year-old cabinet-maker and former Baptist preacher who began offering one-day rail excursions from Leicester to Loughborough for a shilling.
From there, it went on to become one of the world’s largest holiday companies, marking its 175th anniversary three years ago.
A PPF spokesperson said: “Insolvency events, like the liquidation of Thomas Cook, are exactly why the PPF was set up.
“We are here to protect the financial futures of members belonging to defined benefit pension schemes and they should take comfort knowing we are here to protect them.”
A spokesman for Thomas Cook’s pension trustees declined to comment on Friday.