TUI Travel, the largest tour operator in Europe have merged four of their smaller pension funds, so they now have three large ones. The funds, which had a large deficit, will now be merged together and supported by a newly formed partnership, which will hold the brand rights of both Thomson and First Choice holidays.
The changes, which are unusual, will see the partnership pay £16.5million over the next fifteen years into the pension funds, as payment for the use of the brands now owned by the partnership.
TUI Travel will also make payments of up to £275million over the next 15years, which they hope will shore up the deficit.
Pater Long, chief executive of TUI Travel explained, “This is a mutually acceptable solution and an innovative scheme which mitigates the group’s pension risk whilst increasing security for members’ pensions,”
The unusual restructuring, which sees TUI use non cash assets to influence the value of their pension fund has become more and more popular of late.
Sainsbury’s and Marks and Spencer have both transferred property to their pension funds to increase the value of their funds and Diageo, the owners of Guinness have vowed to transfer 2.5million barrels of scotch whiskey a year for the next 15 years into their fund.