Newsbrief No 49 23 March 2003

1. A Question of Trust.

You will recall that the ABAP Committee advised ABAP members in February that we recommended acceptance of BA's Opt-Out proposal. This would result in totally separate Trustee Boards for APS and NAPS, with elected Trustees of APS being members of APS elected by APS members only, and elected Trustees of NAPS being members of NAPS elected by NAPS members only.

It has long been an objective of ABAP that APS and NAPS should be totally separate. We believe that truly independent Trustee Boards would have stopped the outrageous and wasteful BA 1999 Merger Proposal at an early stage. The APS and NAPS investment funds have been separate for some time now and, we understand, are pursuing totally different investment strategies. It is logical that the Trustee Boards should also be truly independent.

Therefore, we initially welcomed BA's Member Nominated Trustee (MNT) Opt-Out proposal.

But we were dismayed to discover, when we subjected the proposal to legal scrutiny, that we were not being told the full story. The regulations on MNT Opt-Outs were amended in autumn 2002. By starting the Opt-Out when they did, BA chose to make an Opt-Out arrangement that can last for up to 10 years. If BA had waited until 6th October, the Opt-Out could only last 4 years under the new regulations!

We do not know BA's reasons for choosing the 10 year term. The length of the Opt-Out is important for APS pensioners. BA's present proposal for APS is that there shall be 5 elected Trustees on the APS Board, of whom 3 will be Pensioners and 2 Active Members. On 30th November 2002 90% of the Members of APS were Pensioners and Deferred Pensioners and 10% were Active (still employed) Members - a ratio of 9 to 1. Yet under the Opt-Out proposal the ratio of Pensioner Trustees to Active Member Trustees is only 3 to 2. Perhaps this inappropriate ratio was the price BA had to pay for Union acceptance of the split of the boards.

In 10 years time will there be any Active Members left in APS ? Unfortunately, BA failed to tell members anywhere in the documentation that their Opt-Out proposal could last for up to 10 years. We have to rely on an undertaking that BA will review the Trustee Board make-up in 2007. We remember Lord Marshall's 1984 undertaking that APS & NAPS would remain separate.

Notwithstanding the above, your Committee decided that the need was paramount in these testing times for separation of the APS and NAPS Trustee Boards as soon as possible. To enable the separate boards to best look after the totally separate interests of APS and NAPS beneficiaries . We regret that this Opt-Out is not limited by Law to 4 years.

But rest assured that we will be holding BA to its undertaking to review the position in 2007. We include below a description of our dealings with BA so members who wish to read further may understand the background to our decision. The consultation document/discussions with BA were pre-empted by BA's shameless action on 8th February 2003.

On that day all beneficiaries of APS and NAPS received an undated letter from BA, the Statutory Consultation Document and a form of objection which refers to BA's letter dated 7th February. It must be clear to everybody that, even while supposed "consultation" discussions were in train with BA, they had made up their mind on the main issue (10 year life of the Opt-Out) and had the documents printed and sent out.

As you will see from the following facts, BA did not have the courtesy to supply ABAP with a copy of their final documents, or even make a phone call, to tell us that they were posting the documents.

2. The Facts of the Matter.

(1) Under the Amending Regulations, BA had three choices. They chose an option that enabled the Opt-Out to last for up to 10 years. When by delaying for a few days, they could have proposed a more fitting and Pensioner-friendly 4 years.

(2) The Regulation was laid before Parliament on 9th Sept and became effective on 6th Oct 2002.

(3) BA notified the Trustees of their intention to make an Opt-Out proposal on 27th Sept 2002.

(4) Due to a quirk in the regulations, notification of an Opt-Out proposal before 5th Oct, if approved by the Members, would result in an Opt-Out duration of up to 10 years.

(5) BA maintain that "The company was not aware, at the outset, that the Opt Out could run for 10 years" (letter 28th Jan 2003 from Rod Eddington).

(6) The Regulation is complex, it was still unapproved by Parliament when BA made its notification to the Trustees (3 above). Good legal advice is needed to understand the option BA chose.

(7) BA say (letter 21st Jan) "With regard to the length of the opt-out, potentially it could run for ten years. Length of the opt-out was not a factor in either the timing or the decision".

(8) We said, if that is so, then there is no reason why BA should not agree to a 4 year life. We also asked to be given the reason why they wanted 10 years. We have not yet been given a reason or any explanation other than "they were not aware at the outset" (that the Opt-Out would last up to 10 years).

(9) Following an exchange of letters we cleared all points except the 10 year point.

(10) In an effort to get that resolved we spoke to BA twice on 31 Jan. After a full explanation and discussion we made it clear that, if there was no movement on the 10 years, we would oppose the proposal.

(11) On 5th Feb we received a letter from BA dated 4th Feb which said: "You have my clear assurance that the company will conduct a thorough review of the situation in 2007- the pensioner representatives will again have an opportunity to participate fully. Furthermore, if the outcome of such a review indicates a case for change, then this will be prosecuted by the company, albeit under present regulations we would additionally need Trustee agreement".

(12) ABAP committee met on 5th Feb and considered all the letters and exchanges. They decided by a majority decision to accept the assurances received from BA subject to asking that such assurances should be included in the Consultation Document.

(13) Regrettably BA pre-empted this by issuing the documents on 7th Feb, without the knowledge or consent of either ABAP, or the BA-sponsored Liaison Council.

(14) On 9th Jan ABAP held a meeting with Rod Eddington, BA Chief Executive, where we were assured that BA valued its pensioners and wanted better relations and a restoration of confidence and trust.

(15) As the consultation document fails to mention the 10 year life of the Opt-Out or to give undertakings on a review and the subsequent action, in the terms expressed in BA's letters, ABAP has written to BA Director for People (11th Feb.) complaining about BA's pre-emption of the discussions and asking that a letter be sent to all APS beneficiaries confirming these undertakings.

(16) Director for People replied on 17th Feb "There are time constraints applied by law to the MNT process. These require completion before the end of March - there is a six month window. With a need to give members adequate time to object, it was necessary to send out documentation in early February - a matter made clear at the outset of the consultation process".

(17) Director for People is correct that the law requires the process, which BA has chosen, to be completed by the end of March. However, the BA deadline of 13th March still allowed a buffer of 18 days, so a few days delay to complete discussions could have been afforded. In any event, to miss the date would not have been a disaster. A further Opt-Out proposal could be made, Trustee consent would be required (unlikely to be a problem) BUT, such a proposal, if approved by beneficiaries, would have a life of only 4 years, rather than up to 10! While Director for People is correct in saying that we were aware of the end of March requirement and had been asked to respond by 22nd Jan, we had an exchange with BA both in writing and verbally. We spoke to BA on 15th Jan, wrote on 18th Jan and again on 23rd and 28th Jan and had replies. On 31st Jan we spoke to both the BA official handling the issue and to Director for People and we received a letter from Director for People on 5th Feb. In none of these exchanges was it mentioned that the discussions had to be terminated. Instead, without warning, BA issued their consultative document.

3. 2002/2003 Subscriptions.

The ABAP Treasurer makes a polite reminder that some subs due from July 2002 still have not reached him. Please examine your cheque book stubs. "It Could be You."

4. Communications.

The ABAP website www.abap.org.uk continues to attract visits. The latest Newsbrief and ABAP information are usually available. ABAP has commissioned a new database. At last we are moving to send Members information direct via e-mail from this facility in due course. Would those Members interested please click here to send their e-addresses via the website to get a list started.

The Committee of ABAP 23rd March 2003.