UK - UK firm TUI Travel has used two of its brands as collateral in a deal with pension fund trustees aimed at plugging a more than £400m (€453.7m) pension deficit.

The deal - almost two years in the making - is the first of its kind to use intangible assets.

Previous deals of this kind, including that struck for Marks & Spencer by Deloitte, have mainly leveraged property assets. TUI had no significant such assets. 

A partnership trust now owns the Thomson and First Choice brands, valued independently at £305m, and will receive royalties for their use representing 1.65% of turnover generated by the brands and £33m annually.

The scheme sponsor retains operational control of the brands. Only if the group becomes insolvent will the scheme be able to appoint a new partner and assume control of the brands. 

Transfer of the brands immediately injected £275m into the TUI pension schemes. The arrangements provide the schemes with a bond-like investment in the partnership, with a fixed return over a 15-year period and a capital injection at the end of it up to £275m.

TUI has also merged the four smallest of its six schemes - the result of successive mergers and acquisitions - into a single structure, which leaves the firm with three schemes: BAL, TUI UK and Thomson Airways.

TUI reward director David House said the company had decided against merging all six schemes because of the "challenging" structure of Britannia Airways scheme.

"It would have meant putting all the schemes into a structure where two member-appointed trustees can veto a board decision," he said.

The new arrangement places 2.5% caps on pensionable pay of employees earning more than £30,000. A defined contribution scheme will make up the difference. Lower earners will retain the final salary structure on full accrual - an arrangement House described as "both affordable and socially responsible".

Asked why the company had not simply closed the schemes to future accrual, he said: "We've achieved the same level of saving without doing it. This arrangement is more innovative, better for employees and a better solution for stakeholders."

The company says the deal will reduce its cash obligations to the merged schemes from £90m to £52m annually.