Flybe pensions at risk for 1,350 workers and ex-staff

Pension scheme based in Isle of Man sits outside jurisdiction of UK lifeboat scheme and not protected

The pensions of workers at collapsed airline Flybe are at risk after it emerged they have no protection under the UK’s lifeboat scheme, the Pension Protection Fund (PPF).

Around 1,350 of the airline’s employees and former employees are in the British Regional Airlines Group (BRAG) pension scheme, which is based in the Isle of Man, outside of the PPF’s jurisdiction.

The pension fund may not have enough cash to cover all of the payments promised to workers at Flybe. The last reported valuation of the scheme in 2018 revealed it had liabilities of £170m and an overall deficit of £11.6m.

Usually, with pension schemes in the UK, employees qualify for 90% protection from the PPF if their company is declared insolvent, while retired members are 100% secure.

Steve Webb, partner at pension consultants Lane, Clark & Peacock said: “It is a devastating blow to Flybe workers not only to lose their jobs but potentially part of their pensions as well. The creation of the Pension Protection Fund was designed to stop this happening, but the Flybe case shows that there are still gaps in the safety net. The government needs to do more to alert workers whose firms would not be protected by the PPF so that other workers do not end up in the same position as Flybe staff.”

The PPF confirmed Flybe would not come under its jurisdiction. A spokesman said: “We understand this must be a worrying time for Flybe employees and pension scheme members. The Flybe pension scheme is based in the Isle of Man under the jurisdiction of their government, which is separate from the UK government, meaning the scheme is not protected by the PPF.”

The Isle of Man trustees of the scheme said they are urgently assessing the impact of the Flybe collapse.

Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

In a statement to Flybe employees, the trustees, based in Douglas, said: “You will no doubt be aware of this morning’s very sad news that Flybe went into administration at around 03.30am with the appointment of administrators from Ernst & Young. The Board of BRAL Trustees (IOM) Limited (the Trustee) is meeting later today to make an initial assessment of the impact of Flybe’s administration on the scheme and to determine how best to secure the scheme’s position in light of this news. We will therefore be communicating with you in this regard in due course.”

The BRAG scheme is a defined-benefit scheme, based on an employee’s final salary, which is closed to new members and future accrual. Auditor EY has been appointed administrator of the firm.

The Isle of Man Financial Services Authority is the official regulator on the island. In a statement, it said: “At this time we continue to engage with the trustee and the administrator of the pension scheme in relation to the impact of Flybe’s administration on the pension scheme.”



Contributor

Patrick Collinson

The GuardianTramp

Related Content

Article image
Flybe: business and political leaders warn of severe impact on regions
Loss of vital transport links and jobs top concerns in south-west, Midlands, Scotland and Northern Ireland

Steven Morris and Joanna Partridge

05, Mar, 2020 @4:44 PM

Article image
Hundreds of Flybe pension fund members have no safety net
Trustees say there is £80m hole in scheme and no protection for workers at collapsed airline

Patrick Collinson

09, Mar, 2020 @2:31 PM

Article image
UK pensions lifeboat to block Toys R Us survival plan
About 3,200 jobs at risk at 100-plus UK outlets after Pension Protection Fund says retailer’s insolvency plan fails to address its pension scheme deficit

Sarah Butler

19, Dec, 2017 @3:16 PM

Article image
Flybe cancels dozens of flights because of 'operational issues'
Airline also announces plans to close two bases in Cardiff and Doncaster, putting jobs at risk

Angela Monaghan

03, Apr, 2019 @1:09 PM

Article image
Can the UK regional airline Flybe fly out of its troubles?
All you need to know about the domestic carrier’s long-running problems

Gwyn Topham

14, Jan, 2020 @6:01 PM

Article image
Council staff pensions at risk from Woodford investments
Three council pension funds have put in up to £10m in sister fund hit by suspension of flagship scheme

Kalyeena Makortoff and Julia Kollewe

16, Jun, 2019 @10:51 AM

Article image
Thousands of UK Toys R Us jobs saved after deal with pensions body
Retailer agrees to inject more than £9m into fund as Pension Protection Fund and creditors back insolvency plan

Sarah Butler

21, Dec, 2017 @5:34 PM

Article image
BT considering closing defined-benefit pensions scheme for existing staff
Move by telecoms group follows similar, but more advanced, proposal by Royal Mail Group that has led to strike action threat

Simon Goodley

30, May, 2017 @6:00 AM

Article image
Palmer & Harvey's pension deficit balloons to £80m
Loss-making grocery supplier’s liabilities increased from less than £30m in 2007 as shareholders received more than £8m a year in dividends

Sarah Butler

05, Dec, 2017 @9:08 AM

Article image
Government let slip chance to retrieve £364m from Carillion
Cabinet Office didn’t pursue directors to accept proposal that could have cut cost of collapse to taxpayers

Rob Davies

04, Mar, 2018 @6:00 PM