Pilots’ union Balpa is calling for a cap on pension payments to be rethought as 67 of its members who fly for Monarch Airlines face missing out £10 million in retirement payouts after the carrier was sold.
The pilots are facing the loss after the Mantegazza family handed over the airline last month to investment fund Greybull Capital, The Telegraph reported.
Greybull took control of 90% of Monarch after agreeing to pump in £125 million of capital and liquidity facilities, anchored by a £50 million investment.
Monarch’s pension fund – thought to have a deficit of more than £500 million – was not part of the deal.
In return for taking on the liabilities, the fund was transferred into the Pensions Protection Fund (PPF), the state-backed lifeboat which bails out underfunded pension schemes in companies which have collapsed or cannot afford to meet their liabilties.
The PPF also got a 10% stake in the airline and £30 million from the Mantegazzas for taking on Monarch’s pension.
However, payments from the PPF are limited to just over £26,500 a year, meaning that many of the airline’s pilots will seen their pensions slashed as a result, according to the newspaper.
Balpa says the cap means 67 pilots face losing £10 million between them – an average of more than £156,000 each – and 13 of them will lose more than half of their expected pension.
General secretary Jim McAuslan said: “This cap was meant to stop highly-paid company bosses being reckless and then walking away with a huge pension when things went wrong.
“The reality is it is hitting middle-earning professional people like pilots and costing them a big chunk of their retirement fund.”
In a letter to the government, Balpa says the current system is having a “hugely deterimental impact” on the financial well-being of a group who “followed good government advice and saved a substantial proportion of their income in order to enjoy a decent retirement”.
The union adds that while its members hit by the cap are well paid, they are not “fat cats” or directors or managers able to influence the company’s pension scheme or commercial matters – the group the cap was intended to target when it was implemented a decade ago.