Pension plan 'will save TUI £38m a year'

Tour operator TUI Travel hopes to save £38 million a year following an innovative restructuring of its pension schemes.

The Anglo-German group will merge four of its six defined benefit schemes at the end of this month, and provide the remaining three schemes with a limited interest in a partnership that holds its Thomson and First Choice brands.

The schemes will then receive royalty payments of 16.5 million a year from TUI UK in exchange for using the brands, for 15 years up to 2026.

If at this date the pensions, which face a 431m funding shortfall, are still in deficit, TUI will make a further payment of up to 27.5m, meaning a total of up to 275m will be paid in. The group's final salary schemes have 2,900 members, and although they are closed to new joiners, they remain open to future accruals.