British tourists are not the only people left in the lurch with the recent collapse of iconic British travel agency Thomas Cook. Members of the company’s four UK defined benefit (DB) pension schemes are waiting to see how the Pension Protection Fund (PPF) will be able to protect the schemes’ 13,500 members.
As reported in PensionsAge, a PPF spokesperson noted that “we want to assure members of Thomas Cook’s DB pension schemes that their benefits remain protected by the PPF at what must be a worrying time for all concerned.”
However, a PPF assessment period can last for between 18-24 months, which inevitably creates uncertainty for individuals relying upon income benefits from the funds being assessed.
The PPF generally pays lower benefits over a person’s lifetime than the member would have received had their scheme remained solvent, though the alternative of losing benefits completely through an insolvent pension scheme would have calamitous consequences for most individuals.
Familiar high street retailers are not the only businesses at risk of insolvency, and this is particularly true as internet giants like Amazon disrupt traditional markets with business models that incumbents often struggle to compete against.
The 415 UK companies going into administration in the first quarter of 2019 represent the most recorded by the government’s Insolvency Service since the first quarter of 2014. Ongoing uncertainty over the consequences of Brexit seems set to ensure a rocky road ahead for British businesses with rising costs and stagnant revenues.
For expats, seeing names like Thomas Cook in the headlines is a vivid reminder that the world of business is often one of winners and losers, and the consequences reach far beyond the impact on customers and current employees.
If you hold UK pension assets in an occupational or personal UK pension, it is important to keep these under review. A financial advisor can help you to review your existing arrangement and determine whether they meet your retirement objectives.