Newsbrief No 59

Contents:

1. Pension Protection Fund

2. More Pensioner Trustees?

3. Pensioner Trustees: Payment.

4. Pensioner Trustees :Training.

5. Pensioner Trustees: Insurance.

6. Pensioners : Extraordinary General Meetings.

7. Variable Pensions Update.

8. New Chairman of Pension Schemes Trustees

9. SAGA Magazine.

1. Pension Protection Fund : Is it More, or Less, Security for Your Pension ?

The new Pension Protection Fund created by the Pensions Act 2004 came into effect on 6th.April 2005. In essence, when an insolvent company cannot afford to honour the promises made by their Scheme the Pension Protection Fund will take over the running of that Scheme. It will ensure that the pension scheme beneficiaries receive at least a proportion of their pensions. There is to be no Government money involved. Therefore the costs of running this new organisation and the paying of benefits from it are to be financed by means of a Levy on the dwindling numbers of surviving pension schemes.

Presently there is some doubt that the Airways Pension Schemes (APS & NAPS) can ever qualify for protection by this fund. None the less Members may not be surprised to hear that BA has already decided that the Levy of several hundred thousand pounds must be paid from the Scheme assets.

The Scheme Trustees have even been told that they may like to pass on the cost of this Levy to members by deducting it from their pension. It is presumed that active members will be levied similarly for protection of their future pensions.

The Levy for this year 2005-2006 has been set at £15 per Pensioner and current contributory Member. The Deferred Pensioner Levy is £5 each Clearly, this will rise next year and in the future in the light of the health of the pensions industry.

It has been reported that MG Rover has already applied to the PPF for earmarking of some £400m for the liabilities of its pension scheme. The failure of the MG Rover pension scheme is a tragedy for their work force, but it also affects YOU. Our scheme will have to contribute to the MG Rover rescue package. This will be at the expense of our own security as money is to be paid out of our Scheme's funds.

Your Committee is concerned that :

(1)BA expects the Scheme or Members to pay the Levy. But BA has chosen to sponsor the Schemes and so should rightly bear the cost of the Levy. We find BA expectations unacceptable to Members, since the Levy is intended to protect us if BA were unable to honour the commitment it has made to us all - remember BA is largely responsible for the current low level of funding in the Schemes in the first place. Perhaps you will wish to complain to Mr Rod Eddington at BA before he returns to Australia.

(2)The Levy although at a flat rate initially will rise and become a heavy drain on the fund in future years.

(3)The Levy is charged per head and this includes all those many Members whose only entitlement under the scheme is a pension of £50pa because they took a refund of their pensions when they left BA. Members who are alarmed at the PPF arrangements may ask why the Government 1997 tax on pension schemes' investment returns has not been trimmed to improve the buoyancy of the infant PPF. As there is an Election imminent, Members can make their PPF views felt as forcefully as they wish to Parliamentary Candidates aspiring to Bombproof Pensions !

2. More Pensioner Trustees ?

The law permitting BA to set the number of Trustees is expected to be repealed in Autumn 2005. However, it is possible that the current split of Pensioner Trustees, 3 APS Trustees for 30000 Pensioners and 2 APS Trustees for 3000 Active Members, although clearly grotesque, will still be allowable for a transitional period. BA has said that if possible it intends to keep the current arrangements until 2013 subject to the promised review in 2007.

ABAP will be pressing hard for a meaningful review as we clearly are not properly represented (How about "Human Rights" did you say ?)

It is worth reminding Members that the mature nature of APS does mean the remaining Actives will become Pensioners fairly shortly themselves any way. So any apparent advantage deemed lost as an Active could soon be regained as a Pensioner.

3. Trustees to have further Training

In the changed climate of occupational pension schemes with failures, critical investment strategies and the complications coming from taxation, all Trustees need to be conversant with scheme documentation and to have knowledge & understanding of pension matters. Following the implementation of the Pensions Act 2004 all Pension Scheme Trustees now have to undergo more training especially in relation to Funding & Employer Contributions (Perhaps to prevent scheme "paper"equity surpluses ever again being allowed to permit hard cash Company Contribution Holidays again.)

4. Pensioner Trustees : Payment.

BA will not agree to pay Pensioner Trustees for the time spent carrying out their duties. Despite the changed lives of Pensioner Trustees, so that being Retired is becoming rather a hollow joke. See above. No fees may be paid by the Scheme (without permission from a court of law. See below)

5. Pensioner Trustees: Insurance.

Scheme Trustees are looking for insurance cover to protect them financially from litigation as a result of any action they may have taken in their duties. BA has said that the Schemes should pay the premiums, and it will require the permission of a court of law. BA is quite keen to have the Schemes given permission to pay the Premiums, but did not actually mention putting Trustee Payments to the Court as well.

6. Pension Trustees Extraordinary Meeting now called by Pensioners.

At the time of the proposed scheme Merger Capt. Mike Post was able to use Rule 25 to call an Extraordinary General Meeting. The Rule has now been improved by the Trustees so that an EGM may be called by either: A current Employee or, now, a current Pensioner In each case the request has to be backed by signatures: 50 Actives or 100 Pensioners as appropriate.

7. Variable Pensions.

The Trustees at their last meeting considered the Variable pension situation and decided against any change in the present arrangements. But they did concede that they will review the issue again after the results of the Triennial Valuation 2006 are received. ABAP is well aware of the strong feelings of Members on this issue, and we are again disappointed that the Trustees do not act to right this wrong.

8. New Chairman of Trustees.

BA has announced that the new Chairman of Trustees is Mr Roger Maynard. We welcome his appointment, and look forward to continuing the progress for pensioners made with his predecessor.

9. SAGA Magazine.

Following a suggestion made at the 2004 AGM an ABAP advertisement was placed in the February issue of the SAGA Magazine. We hope that it will continue to attract attention in Doctors & Dentists waiting rooms for some months to come.

The Committee of ABAP. 23rd. April 2005