Newsbrief No 56
Contents
1. The Way Ahead.
2. Rule 25. Meetings of Members.
3. Pensions Bill 2004.
4. Late News. Pension Aid Package.
1.The Way Ahead.
Although the Association has listed Aims & Objectives, the over riding purpose is the Security of the Pensions of BA Employees and Pensioners. This is achieved by working with British Airways plc and the Boards of Trustees of the Pension Schemes either directly or via the elected Pensioner Trustees of the Schemes. The Association is run by an annually elected Committee meeting a minimum of five times a year, or more if required.
Time Marches On.
This year the Committee will finally lose two Members, Chairman George Bell, and Captain Jack Wickson are not standing for re election in October.
In addition, Mrs. P. M. Lock, a co-opted Committee Member, will stand down w.e.f. 1st. September 2004. Pam has had a long association with the Committee. She has made major & exceptional contributions based on her extensive business knowledge and Conservation committee work on the many issues we have faced. We shall miss her experience & guidance. Now we wish both her & Bill a long , peaceful, retirement away from Pension hassles.
Their glittering aeon in ABAP includes:
1. The original objection to the BA 1989 Pay & Pensions settlement. Still Outstanding
2. The successful campaign for, and the subsequent election of, the original Pensioner Trustees following the 1995 Act.
3. The successful campaign against the Merger of the BA Pension Schemes that minimised BA losses & preserved the separate schemes.
4. The High Court Hearing on Clause 11 of the APS scheme & the successful Appeal on Clause 18.
After this cavalcade of people & events you may feel with the consolidation of Pensioner Trustees, & separate Boards of Trustees that ABAP can come down out of the hills and disband . As the good fight has been fought, we can leave it all to the Trustees.
NEVER.
Your Committee & your Pensioner Trustees strongly advise against this comfortable Scenario. ABAP is vital for providing advisory back up for the proper functioning of the Pensioner Trustees however many we may finally have. The current nationwide pensions situation with Schemes closing or company takeovers leaving Pensioners disadvantaged (to put it mildly) means that ABAP must remain in being to watch over the security of the BA schemes as this treacherous period for pensions continues. Even in the light of the Pensions Protection Act due in 2005, which is not all that it seems (see below)
Therefore ABAP needs Committee Members to come in to keep the show on the road. We ask you, the Membership, to seriously consider doing a spell on the Committee. You will be properly briefed on joining and serve for a finite time. There will be no "chaining to the oars" of the ABAP galley. Dates for Committee Meetings are being fixed for a year ahead. Although in the past circumstances have led to extra Meetings being required.
Out of the Thousands of Loyal Members, ABAP is looking for at least a Chairman & two Committee Members.
It could be You , and it is wholly worthwhile.
Please get in touch urgently with any present Committee Member to talk about what is involved.
2. Rule 25 APS & NAPS. Meeting of Members.
This Rule gives the following right: "A Meeting of Members maybe convened, or a postal ballot taken by the Management Trustees and shall be convened or taken by them on requisition in writing by an Employer or 50 Members." According to the advice given to the Trustees by their Legal Adviser in 1999, the Interpretation of Members means only Active Members (i.e. those in employment) This means that Pensioners cannot call a meeting or a ballot.
The meetings and ballot held in 1999 were the result of 2 Active Members collecting 50 signatures from their Active Member colleagues. ABAP has raised this on a number of occasions with BA, and the present Chairman of Trustees and his predecessor, pointing out that this Rule is inequitable, and it effectively disenfranchises the majority of beneficiaries who are Pensioners.
In discussions with BA on the Opt Out Proposal in 2003 BA did not oppose our suggestion that this Rule should be changed to include Pensioners. We also discussed this with the present Chairman of Trustees, and then wrote to him 27th November 2003 requesting that the Trustees should consider changing this Rule.
The proposed change was put to the Trustee at their Meeting on 17th December 2003. The minutes of that meeting record that on APS: Mr Walker, Capt. Post, Capt. Pocock, Mr Tomlin, Mrs Cassidy, & Mr Boyle voted In Favour of the Change Mr Bromwich, Mr Mitchell & Mr Holloway voted Against .
Although there was a majority In Favour of the Change there was not the overall 2/3rds. majority required for a Rule Change.
The NAPS voting was Mr Walker, Mrs Cassidy, Mr Gunner, Mr Hogg , Capt Revell & Mr Boyle voted In Favour of the Change. Mr Gray, Mr Holloway & Ms Jones voted Against..
It is surprising to see 3 Member Elected Trustees, namely, Mr Bromwich & Mr Mitchell in APS and Mr Gray in NAPS voting Against such a change.
Mr Bromwich is recorded as saying: "That he was not able to agree with the Amendment as he considered the facility to call Meetings might be exploited and in the past had served only as an opportunity for a minority of organised beneficiaries to express their views which had effectively rendered the process undemocratic."
Mr Mitchell concurred with this view and suggested: "that the minimum number of Pensioners that could request a Meeting should be 250."
We will not comment on these remarks other than to remind Members that the meetings in 1999 were the first in the history of BA Pensions. Active Members called for the Meeting, which was at Heathrow and attended by 800 Active Members. At the second meeting at Waterside, called by the Trustees, 1500 Pensioners attended. In the resulting ballots of Members & Pensioners the Trustees position on the Merger was overwhelmingly defeated. In the Active Members Ballot 78.2% Voted, of those 92.77% voted to reject the Merger. In the combined Ballot of Pensioners & Deferred Pensioners 65.29% Voted, and of those 78.46% Rejected the Merger Proposal.
Such high voting returns surely cannot be classed as undemocratic !
Mr Walker has written to ABAP advising the result, but he has expressed his wish to have better relations with us and has stated that when the Trustees discuss this matter again in the future, the necessary 2/3rds.majority will be achieved.
We have responded in a similar vein, stating we hope the reconsideration will not be too long delayed.
3. Pensions Bill 2004.
We understand the Pensions Bill has now passed through the House of Commons Committee stage, and is expected to receive the Royal Assent in November 2004; Priority is to be given to the Pension Protection Fund (PPF) and the Pensions Regulator, it is anticipated that these will be in force by April 2005.
During the controversy surrounding the Merger proposal, ABAP produced a paper opposing the Merger, it began: "What is it you value most about your APS Pension? Without doubt the answer would be the peace of mind it provides in terms of solvency & security." This of course applies to NAPS and All occupational pensions. Security has been the over riding priority of ABAP over the years, and it remains so.
The 1995 Pensions Act introduced to protect pensions was deeply flawed and has left behind a trail of broken promises, huge pension fund deficits, and the human tragedy of many thousands of pensioners who have lost all or part of their Pensions.
IT MUST NOT HAPPEN AGAIN.
It is incumbent on every Member of Parliament (whatever their political persuasion) to ensure strong protective laws are enacted to safeguard Pensions. Every BA Pensioner can play their part in strengthening the Bill by lobbying their MPs, HM Government, and the media.
ABAP has summarised the issues in Newsbrief No 50 (Green Paper) and more specifically in Newsbrief No 55. Thanks to those who have written to their MPs. To those who have not, there is still time. The Bill will be debated in the House of Lords before returning to the Commons for final consideration. We have joined the Alliance of Occupational Pensioners (AOP) who are lobbying Parliament on the Bill. We have met the General Secretary and explained ABAPs views. This is the most effective way to have an input into Parliament to support the views you express to your MPs. When the proposals were announced, we warned they would be subject to change. There has obviously been fierce lobbying, and this will continue until the Bill becomes an Act. Even then there will be further lobbying on the enabling Regulations and Legislation. PPF.
We understand the main proposals are at present as follows:
1. Pensioners who are over normal benefit age, dependents, and those who retire on ill health grounds will be paid 100% of their entitlement at the time of insolvency of the sponsoring Employer. All other Members including those who have taken early retirement for what ever reason will be paid 90% of their entitlement.
2. Spouses benefit on the death of a Member after the date of an insolvency will receive 50% of the Member's pension. We assume this means that spouses pensions received prior to the date of insolvency will be paid in full. How those cases where Members have paid additional contributions to increase spouses benefit above 50% will fare under this limit will not be clear until details of the provisions are finalised.
3. Any benefit for Active Members payable by the PPF will be subject to an age related cap, which will increase in line with average National earnings. It is indicated that the benefit set at 65 is expected to be £25k. pa initially. Those younger than 65 will have a lower age related cap.
4. There will be no indexation on the 100% benefit paid to Pensioners & Dependents. This will represent a severe & serious cut in pensions. Although we welcome the PPF for the protection it will provide in cases where an insolvent Employer leaves a pension fund with insufficient assets to meet its liabilities it will nevertheless severely affect the Pensions & anticipated Pensions of the Members concerned.
In the absence of the annual indexation using the Retail Price Index (RPI) means that, given an annual rate of inflation of 5%, the value of a Pension is halved in 13 years. At the moment inflation is 2.8% but even if that rate is maintained it will seriously erode the living standards of occupational pensioners, and it will be especially severe on those on low pensions. The entire issue of indexation must be addressed urgently, to avoid either a generation of poverty stricken pensioners or the taxpayer having to foot the bill. Schemes Specific Funding.
We have no news on this, however it is clear that the PPF will provide only basic compensation in the event of insolvency, there is therefore the danger that the PPF will be used as some kind of discontinuance bench mark. ABAP has been clear since the start that since the Government does not guarantee the PPF, there must be a prescribed and regulated Minimum Solvency Requirement (MSR) with regulated actuarial assumptions and valuations together with a "matched" investment policy which reflects each Scheme's accrued liabilities. This is absolutely essential for the future security of all Members & Pensioners, and the success of the PPF. Member Nominated Trustees.(MNTs)
It appears that the Employer "OPT OUT" will be abolished, and the Member Nominated Trustee (MNT) regulation will supersede the OPT OUT. We have made our views known to the Dept. of Work & Pensions and thanks to replies which Members have had from their MPs, we have been able to write to explain our reasoning to the Minister of State concerned. Clause 12 of the APS Trust Deed (which will now have to be rewritten) provides for equal numbers of Management appointed and elected Trustees, currently 10 in APS (5 Management,3 Pensioner elected,2 Active Member elected). In NAPS there are 12 Trustees(6 Management,5 Active Member elected,1 Pensioner elected).
Since APS Membership comprises over 90% Pensioner & Deferred Pensioners, the elected Trustees should reflect this. Clause 18 of the APS Trust Deed which gives the Trustees amending powers recently confirmed by the Court of Appeal provides in 18(iv) one of its entrenched clauses that "the Management Trustees shall consist of an equal number of representatives of the Employer & the Members respectively. Summary. A prescribed & regulated true Minimum Solvency Requirement (MSR) with regulated actuarial assumptions and valuations, together with an Investment strategy, which matches each schemes' accrued liabilities is essential. HM Government must deliver its promise to abolish all Employer OPT OUT arrangements as quickly as possible after the Act comes into force. There should be proportional Trustee representatives for all Pensioner & deferred Pensioners. Indexation for all Pensioners & Dependants must be maintained Once again TIME IS SHORT, start your lobbying NOW. These points are of the first importance to all Pensioners, and we remind you, to start lobbying NOW.
4. LATE NEWS: Pensions Aid Package.
The Government has announced a separate aid package of £400m to be paid in instalments over 20 years to help the estimated 60,000 Pensioners who have lost all or part of their pensions following the insolvency of their Employers. The structure of this fund, level of assistance, & payment details have yet to be announced.
It is a welcome small step, and clearly the compensation levels will be low, and not commensurate with the losses sustained by the Pensioners. It should be noted that this package is quite separate from the proposed PPF. The success of the campaigners & MPs on this issue illustrates the success of lobbying your MPs on matters of concern.
We reiterate our message: LOBBY YOUR MPs FOR A BETTER PENSION PROTECTION FUND.
The Committee of ABAP 20th May 2004