Travel business Thomas Cook has completed a £900 million bulk purchase annuity buy-in transaction for its UK pension scheme.
Aviva insured the defined benefit (DB) pension liabilities for more than 12,500 scheme members following the liquidation of the business in 2019. There were 12,693 members in total, consisting of 8,421 deferred members, 3,847 pensioner members and 425 dependant pensioners.
The deal aimed to create a better outcome for the majority of members, providing pension benefits at or in excess of Pension Protection Fund (PPF) compensation levels with no reductions.
Vidett, formerly known as 2020 Pension Services and scheme trustees, was independently advised on actuarial investment and risk transfer matters by Barnett Waddingham, as well as receiving support and guidance from the PPF and legal advice from Gowling WLG. Open trustees provided advice and support to the plan trustees throughout the PPF assessment period and buy-in process.
Steve Southern, spokesperson for Vidett, said: “We’re delighted to have entered into the buy-in policy with Aviva. This transaction will eventually see members receive benefits either at or, for many members, with an increase above PPF compensation levels. We’re pleased to share this positive news with members, who we know have had a difficult time over the last few years following the unfortunate liquidation of Thomas Cook.
“The PPF provides a valuable safety net and a significant level of protection but many members will now receive higher benefits than they might have expected because of the transaction with Aviva. Members can take comfort their benefits will be looked after. The trustees are pleased with this development and are very grateful to their advisers and the PPF for their help and commitment throughout this process.”
Richard Gibson, partner at Barnett Waddingham and lead adviser on the transaction, said: “Barnett Waddingham’s specialist risk transfer team has helped the trustees of the Thomas Cook pension plan to assess how they could best provide value and security to members following its liquidation.”