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.

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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.”


Patrick Collinson

The GuardianTramp

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