Newsbrief No 53

Contents. 15th December 2003.

1. AGM Report.

2. Chairman's Report.

3. Captain Cliff Alabaster.

4. Treasurer's Report.

5. Pension Protection(Green Paper).

6. 2003 Valuation

7. Trustees Valuation Minutes Request.

8. E Mail Update.

9. Membership Secretary Telephone Number.

10. Scrooge Corner.

11. Christmas Wishes.

1. AGM. Concorde Centre Heston.

At 2pm 16th October 2003. The Chairman, George Bell, opened the 13th Annual General Meeting by welcoming all those present. Again there was an excellent turnout of some 300 Members as 1017 proxy votes submitted, nearly all In Favour of all the Resolutions. 2 were cast Against the Accounts.

Chairman's Report

The Chairman presented his report on the action taken in the last 12 months which follows in 2. Below. It is clear that the work of the Association continues to be vital. He also thanked the Committee for their work, and recognised that many had served for a long time even by Pensioners standards. Once again he said that it was & is imperative that younger Members of both APS & NAPS learn from our experience. One cannot assume Everything will be All Right.

Study the position, the developments, & examine the Trustees decision - The Future, your Future, is up to you.

George concluded his report by thanking those Members who had voluntarily sent in extra donations to the funds.

Resolution1. Acceptance of the Chairman's Report was proposed by Vernon Stone, and seconded by David Cole & Carried Unanimously.

Treasurer's Report.

The audited accounts had been published and circulated prior to the Meeting. Jack Shill, the Treasurer answered some of the questions arising. He undertook to answer the others more fully in the next Newsbrief.

Resolution 2. Acceptance of the audited accounts was proposed by Rod Berkeley, seconded by Roy Hutchings, and carried by those present.

Committee Members.

Resolution 3. The re-election of Committee Members was proposed by Jim Nicholl, seconded by Cliff Alabaster, & carried unanimously.

Resolution 4. The approval of the current subscription levels.

This raised a debate as some Members were concerned that it was not necessary to add to our reserves. Other Members insisted that insufficient funds may hamper the Association. It was proposed by Mr Brown that the subscription from July2003 should return to £1. Per £1000 pa of gross Pension received. With Pensioners receiving less than £2000 pa gross Exempt, and both Active & Deferred Members paying £5 pa until they receive their Pension. This was seconded & carried unanimously by all those present.

COPAS.

Roy Hutchings gave a report on the developments within COPAS. A new organisation was being formed , The Occupational Pensioners Association which would include pensioners from the National Federation of Post & BT Pensioners as well as Members of COPAS, if they choose to join. Indeed some COPAS Members have joined already but the number they represent is quite small compared with the Post Office Pensioners. It is feared by Roy that this organisation could become too unwieldy & political. He suggested we withdraw, wait a while & see how things turn out. Consequently there was no request for allocation of funds to meet our subscription to COPAS. The report was approved by a show of hands.

Any Other Business.

A Member returned to the subject of subscription levels but was gently ruled Out of Order as the subject had been voted upon and passed overwhelmingly. Another year and there is no news on the Variable Pension Request. It was explained the only way we might get a sympathetic hearing from BA was if the Funds were in substantial surplus. This is not the case at present, however, it will remain on the Association Agenda for the future. The Security of Pensions in payment is a subject dear to the hearts, and pockets, of all Members. The proposed legislation is not of much help and may well make matters worse. The Committee was keeping the developments under close scrutiny and reports will be made as soon as they become clear. The difference between APS & NAPS was again emphasised. The Members expressed their sincere Thanks to the Chairman and All Members of the Committee. The Meeting closed at 15.28hrs

2. Chairman's AGM Report.

"This has been another busy year in monitoring events in the Pensions field. The Government issued its Green Paper on Pensions, while there are some proposals that we welcome, regrettably the main points in respect of occupational pensions have not been grasped. One could be forgiven for thinking that this is a Dumbing Down of Pensions. There are proposals that seemed to be aimed at reducing the Pension cost for the Employer, rather than trying to ensure that the "Pension Promise" is made good. There has been much written on this, some commentators taking the line that Members of Occupational Pension Schemes have not yet understood that there is no absolute commitment to provide the Pensions promised. I am sure you do not agree ! Your Committee believes that a Pension Scheme is part of the Service Contract and not a gratuitous act of beneficence by the Employer. This we believe is true of our pensions, as always, we must defend our Pensions , and for that reason we ask you write to your MPs on a number of proposals in the Green Paper. The main points of the Green Paper are to be repeated in the next Newsbrief, and a fuller version is available on our website for those of you who wish to see it. Thank you to those who wrote to your MP. We are asking yet again that you follow this up.

Opt-Out.

I want however, to highlight this issue, and I make no apologies for doing so as it could have an important impact on APS. Last year we told you that BA had advised that they intended to make a new opt-out proposal. As you know they did so, and we now have separate boards of Trustees for APS & NAPS. While the Committee did not recommend the proposal, we were, and remain, concerned that the BA proposal gives a life of 10years to the current opt-out. The Government in the Green Paper were committed to abolishing the Employer's opt-out, so we would ask when writing to MPs you make the point that the current opt-out arrangements must be abolished shortly after the amended Pensions Act comes into force. It is imperative that the Active Trustee representation should be reduced at least to one and the Pensioners increased to four. There can be no justification that the Active Membership which is less than 10% should have 2 Trustees while 90% of Pensioners have only 3. I wrote to the Chief Executive of BA, to register our dissatisfaction at the manner BA concluded our discussions on this subject. It is quite clear that nothing has changed in the BA attitude. However as the result of the new arrangements we now have 3 Pensioner Trustees on the APS Board and 1 on the NAPS Board. We are glad to welcome Cliff Pocock(APS) and Dave Gunner(NAPS) here today. Congratulations to you both, we hope your Trusteeship will be beneficial to all BA Pensioners.

Pensions Indexation

Members will recall Jack Marks talking about researching the question of using the wages increase index instead of the RPI for APS pensions. Jack has worked tirelessly contacting BA Pensions, BA, Inland Revenue, Office of Statistics etc. to try to establish the facts. He discussed his findings with the ABAP Committee in September. The Committee accept that in our opinion Jack was correct that when it was instituted APS had been based on Pensions which would be indexed using the wages index. Regrettably we also believed that due to the passage of time it would be impossible now to establish that. However, the Committee would like to thank Jack for the immense amount of time & effort, which he has put in to try and get at the facts. Another of our Members has written to his MP,on the effect of inflation on Pensions. He has kindly copied me in on the correspondence. He points out quite correctly that for the majority, Pensions are seldom adequate when they commence. So that full indexing is, as he puts it, "A Must". Preferably indexing should be on the wages index, this what Jack Marks tried to establish. The effect of inflation on non indexed Pensions is dramatic. He points out that 5% inflation on a non indexed pension means the value of the pension is halved after 13 years.

The Message is Crystal Clear. All Beneficiaries must do all they can to ensure that Full Indexation is maintained, and preferably a return to the Wages Index.

Triennial Valuations.

The triennial valuations of APS & NAPS are due to be considered by the Trustees in Oct/Nov. So it will be towards the end of the year before we know the results, which presumably will be available on the BA Pensions website after the Trustees deliberations. Many Members have asked about the figures reported in the Press after the publication of FRS17, which showed a deficit in BA Pensions of £1.2billion. We can only conjecture what this means to the Schemes. We do know that the fall in the value of equities has eliminated the APS surplus. In March 2000 the value of the APS Assets was £6.687billion. In March 2003 it was £5.421billion, a decrease of £1.266billion. This we believe was directly due to the equity dominated investment policy of the Trustees. In March 2000 the value of NAPS assets was£2.905billion. The 2003 value of NAPS was £3.612billion. This looks healthy but we shall have to wait and see what is the cost of the accrued benefits. Remember APS projects all future costs, NAPS only shows the cost of the accrued benefits to the Valuation date. Whether the APS fund is or is not in deficit will depend on the view the Actuary takes of the liabilities & assets. Our anticipation is that the Valuation may show that APS has a small deficit, but that NAPS will have a large deficit. One bright point to emerge is that APS is now invested 50% in index linked bonds &14% in fixed interest securities so that the volatility effect of the equity market will be much less than over the past years. However all this means that the large surpluses have gone. NAPS will we expect present a different picture, and we anticipate that the £228m. deficit in the 2000 Valuation may have increased significantly. As soon as we receive the Valuations we will ask our Actuaries on their opinion on what it means to the Members of both APS & NAPS. We will report the outcome in a Newsbrief as soon as possible.

Clause 24.

Last year we advised that Roy & the Committee (except me!) had their internal dispute resolution complaint rejected by the Trustees, with the exception of the 2 Pensioner Trustees. That complaint is now with the Pensions Ombudsman, and we wait to hear if he is willing to accept this complaint. However, BA true to form has written to the Pensions Ombudsman querying his jurisdiction to investigate this issue. The Trustees were asked by the Pensions Ombudsman if they wished to make any comments. They have now also written to the Ombudsman saying that they do not believe he should investigate. A reply on behalf of the Complainants, Roy, & Other Committee Members involved will be submitted to the Ombudsman before 28th October. The Ombudsman after consideration will decide whether or not to investigate the Complaint. We shall let you know his decision, and if he decides not to investigate, his reasons.

Clause 11.

We have been in correspondence for some time with the Trustees on the way in which the Trustees dealt with the £150m disposable surplus in the 2000 Valuation. The Trustees again with the exception of the 2 elected Pensioner Trustees, maintain that they have acted properly(reported in Newbrief 51) I lodged a complaint with the Ombudsman. After an exchange of Correspondence, the Pensions Ombudsman has refused to investigate this Complaint on the grounds that I have not suffered a financial loss as a result of the Trustees action. Apparently I can ask that this decision be referred to a Judicial Review. I am uncertain about the costs involved. Other alternatives are to ask my MP to request the Parliamentary Ombudsman to intervene, refer the matter directly to the Courts(expensive) or ask OPRA to investigate the Trustees and their administration of the Fund. I have 3 months to decide on the judicial review, so I shall review this Complaint in the light of the decision on Roy's complaint. In January 2003 Mr Walker, Chairman of Trustees asked me to meet him in the company of Mr Birch. We covered all aspects of previous issues, they were concerned to establish better relations with Pensioners. I told them that ABAP would also wish for that, but we needed to see some movement from the Trustees to convince us that this was likely to happen. Specifically we asked that the Legal Adviser & the Actuary who had been in post for many years should be replaced. As you will know the Legal Advisers have been changed but the Actuary is still there. We pressed that they consider changes after the Valuation has been completed. We shall see if anything happens. I also raised the vexed question of Variable Pensions. I have to say that given our experience over the Clause 11 & 24 issues that Nothing Appears to have Changed in the Way in which the Trustees Behave. This is not a criticism of our Pensioner Trustees, Mike & Graham deserve our thanks. They have worked hard and they believe that the Trustees attitude is changing, the addition of Cliff will we hope, provide some acceleration. Finally as usual, my thanks to all the Members of the Committee. Their forebearance & support has made my task easier. Age & family concerns are now taking their toll. Cliff Alabaster has resigned, I shall come to that later, But others now wish to follow Cliff into retirement. So I again ask for volunteers for the Committee, we need "younger" Members to replace us. We need fresh blood & fresh ideas. Apart from health there is Nothing more important to our Wellbeing than Our Pensions. So please help or ABAP will simply cease to exist. (it is not essential to be an expert to start with !) I myself have notified the Committee today that I shall step down before the next AGM October 2004. Thank you."

Cliff Alabaster.

On behalf of the Committee & I am sure all Members, I would like to pay tribute to Cliff. Cliff was a Founder Member of BAPA and had been before that a Member of a Group writing to the Trustees on Indexation. He served as Treasurer for many years before handing over to Jack Shill. A modest Man with a distinguished war record, one of the few Bomber Command pilots who survived 100 operational missions. He also survived a friendly fire incident over England when he was shot down by an RAF Hurricane. He followed that by a distinguished flying career in BSAA BOAC & BA. He has much to be proud of. He remains however modest, always courteous, thoughtful and very fair. He is in my view (speaking as an Ulsterman) the quintessential Englishman. We shall miss his honest forthright advice. But we recognise that age, and the recent injury that he sustained convinced him that it was time to retire gracefully. We wish him a long & happy retirement. The Committee has decided to make an exception, and as a mark of appreciation to make a small presentation to Cliff in recognition of his past service. I hope that this meeting will show their appreciation of Cliff by their applause. "

3. A Letter Received from Captain Alabaster. 25th October 2003.

Dear George, Being confused at the unexpected gift of the beautiful silver salver at the AGM on 16 October, my words of acceptance were completely inadequate to meet such a generous gesture, from you, the Committee and the Association's Membership. The presentation ,very much appreciated , was really out of all proportion to the minor part I played on the Committee. For several years I acted as Treasurer,and in conjunction with Ron Chowns, and produced the Newsbrief, but these functions to my mind were "engine-room jobs", which did not compare with the importance of the direction of the Association by yourself especially, and other members of the Committee. I must also include in my appreciation of this valuable work, the contribution by Pamela Lock of her legal and constitutional knowledge. Although not a member of the Committee, she supports unsparingly all your efforts. Above all I really enjoyed working on the Committee with such a dedicated group of people, prepared to devote precious time to a worthy cause. Our Members and British Airways pensioners world-wide owe so much to you for the protection afforded to them over the past 14 years against those who have seen our Pension Schemes as fruit ripe for the picking. But for the Association, particularly in the stand against merging APS and NAPS, we would have been sorry losers. The future will undoubtedly hold further challenges against our pensions, whether in the form of Governmental levies, interference from the Company or takeover bids from outside concerns. Thank heavens for the Committee we have to lead against such incursions of our rights, led by you, George.

Yours sincerely,

Cliff Alabaster.

P.S. Could I suggest coupling this with an appeal for a replacement on the Committee ? We've tried long enough to get younger people to no avail. This may bring home the fact that Committee Members are not eternal.

4. The Treasurer's Report.

Following Members questions raised at the AGM regarding the audited ABAP accounts for 2002/2003 I asked our Accountant to clarify the presentation circulated. Given below are the re-structured figures: Revised Figures 2002/2003.

The difference between the 2002 & 2003 totals is accounted for by greater Association activity, more Newsbriefs and postcards covering the Trustee election and new Opt-Out. In addition ABAP now has a new dispatch company that has been re-structuring our increased Membership database. Extra support given as "super Subs" has been £10k in the past year.

5. The Pension Protection Fund ( Green Paper)

On the 11th June 2003 the Secretary of State for Work & Pensions Andrew Smith announced new measures designed to protect Beneficiaries of defined Final Salary Schemes should the sponsoring Employer become insolvent. The key proposal in the measures is a compensation scheme, the Pension Protection Fund (PPF) that is to be established by the Government. It is proposed that the funding will consist of a flat levy paid by all Schemes, with additional Risk Premiums for under funded Schemes. It is important to note that the Government will not underwrite the PPF. It is difficult to assess the viability of the proposals since they are at present just that, and subject to further changes. Consultation is taking place at present, and will continue over the rest of the year. It is essential that the Pensioners voice be heard during the consultation process. ABAP's initial response to the PPF is that this is a positive first step in the right direction, however both this key proposal and other measures have shortcomings and major deficiencies, which we highlight in the following comments. The current Government intention is to bring the main proposals into force by 2005, possibly as late as 2006. Clearly given the financial problems of some companies, plus the global uncertainty, that delay is unacceptable. The Scheme must also be guaranteed by the Government. There can be no doubt that there will be fierce political lobbying by interested paries such as the CBI, Banks, Insurance Companies and also the Preofessional Bodies involved in Pension provision. The Proposals are: 1. If the Employer goes bankrupt, and the company is in wind-up the PPF will guarantee Pensioners (already retired) 100% of their Pensions, however there will be no cost of living increases (RPI indexation). This makes it more essential than ever to ensure that a mature Scheme such as APS with over 90% retired & deferred remains solvent and in surplus. Every effort should be made to ensure that Pensioners receive their full 100% entitlement as proposed plus the RPI indexation which their Scheme Trust Deed and Rule promise. 2. Active members would receive 90% of their entitlement, with a cap of £40k to £60k. The Final Figure for the cap has yet to be decided. There are proposals subject to meeting certain requirements, to change Section 67 of the 1995 Pensions Act, to rescind the restriction which forbids changes to the Rules of Pension Schemes, which would reduce the accrued rights of Members without their consent. All Active Members should oppose this. 3. Solvent Employers will no longer be able to walk away from their Final Salary Schemes by winding them up and using the Minimum Funding Requirement ( MFR ), which may produce only 40-60% of the promised pension. This regulation takes effect immediately. This change is welcome but the downside is that Trustees be given power to agree lower benefits if they consider it to be in the best interests of the Scheme and it's Beneficiaries. This is open to manipulation . This proposal must be opposed. 4. The PPF will be funded by a flat levy on all Final Salary Schemes. In addition there will be an extra premium payment for under funded schemes. The suggested contribution at present is 1% plus any proportionate premium for underfunding. 5. A New Specific Funding Arrangement is proposed to replace the Minimum Funding Requirement (MFR). No details are available, and there is no timetable, meanwhile MFR continues to be the benchmark. This is a worrying development, MFR as indicated above is ineffective and the new proposal does not inspire confidence. Unless a strong solvency standard is introduced, these proposals cannot succeed. Members must press the Government to introduce a strong effective standard. The proposed new Regulator must be given powers to check and direct to ensure compliance.

Opt Out.

We have not seen any mention in Press reports of the Government commitment in the Green Paper to abolish the Employer's Opt Out on Member Nominated Trustee regulations. We must press the Government to deliver their promise to abolish the Opt Out entirely within 3 months of the new regulations coming into force.

Conclusion.

APS & NAPS Pensioners should focus on the following points.

1. We welcome the proposed PPF, it should be introduced urgently, but if it is to succeed it requires to be guaranteed by Government.

2. A strong solvency Requirement or Standard is required to underpin the PPF. Trustees must follow appropriate investment policies.

3. Pension Scheme Assets should be separate from Company Funds on wind-up.

4. Trustees should not be given power to change benefits promised under the Deed & Rules.

5. The Government promise on Opt Out should be delivered urgently.

6. Active Members should be aware of the changes proposed to Section 67 of the Pensions Act (see our website). Latest news is that the PPF may become effective late 2003 or early 2004. Time is Short.

All Pensioner should write or speak to their MPs to canvas that these changes are made without reducing their benefits. Thank you for writing on the RPI. Please now follow up on these proposed changes. Active Members have much to lose, they must write to their Trade Unions & MPs. Their future Pensions are in their own hands. DO IT NOW. More details on www.abap.org.uk

6. 2003 Triennial Valuation.

Members will have digested the BA Pensions "Focus" publication distributed recently showing the Scheme Actuary Valuation at March 2003. This gives APS surplus £45m. NAPS deficit £928m. We are examining these figures with the ABAP Actuary and will report to the Membership as soon as we have his opinion.

7. URGENT

British Airways has produced a package of the Minutes of the Pensions Trustees Meetings following the Valuation announcement. In order to be fully informed as to what this valuation means Members are requested to contact BA Pensions to request their: Trustees Minutes Information Package on: 0208 513 2222. So that your request makes an impact. You can also write in to: BA Pensions Whitelocke House 2-4 Lampton Road Hounslow Middx TW3 1HU

8. E-Mail Update.

Please read the following carefully.

The ABAP e-system of communication works as follows.

Members send in their e address and staff nos. via the ABAP website contact. This is sent to our publisher ( to stop sending printed comms.) and the ABAP Webmaster.

He will alert you by e-mail when there is news on the ABAP website.

If you are NOT being alerted by e-mail as above, and you have sent in your e address, but are STILL receiving postal printed ABAP comms, please resubmit your e-mail address and staff no. There may be a Gremlin loose.

If you are NOT being alerted by e-mail, despite having sent in your e-mail address AND you are NOT receiving postal ABAP comms. either ( you will know this by visiting the ABAP website and finding a Newsbrief there that you have not seen). Please e-mail the ABAP Webmaster with your details again. webmaster@abap.org.uk

The first Member to complete this procedure correctly wins a free weekend in Barnsley!

9. Membership Secretary: 0208 892 9712. Members may not have noticed that the Membership Card for 2003/04 has a misprint tel.no. Please amend your card as above.

10. Scrooge Corner. The Treasurer requests that, before filling any stockings, Members check that they have in fact sent in their ABAP subscriptions for 2003/04.

11. Christmas Wishes.

The Committee thanks All Members for their continuing magnificent support. We Wish You All a Very Merry Christmas and a Happy New Year.

The Committee of ABAP. 5th December 2003.