Newsbrief No. 64 5th August 2006
Contents 1. APS Pensioner Trustee Election 2006.
2. BA AGM. Proxy Report.
3. More Pensioner Trustees.
4. Urgent Appeal.
5. NAPS Pension Cuts for Current Employees.
6. ABAP Meeting with Chairman of Trustees.
7. Financial Times. 4 August 2006.
8. BA Welfare & Benevolent Trust.
9. ABAP AGM . Early Warning.
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1. APS Pensioner Trustee Election 2006.
We make no apology for placing this item first in this Newsbrief as it is very important for Pensioners. Trustees fulfil an essential role in choosing the investment strategy and negotiating contributions to the scheme from BA. It is therefore important that those elected have our full confidence.
Capt. Cliff Pocock is standing for re election, he has our interests at heart. He has the unanimous support of your Committee. His competitor is already an active member of the Liaison Council and does not share or wish to pursue the aims and objectives of ABAP. If you want to ensure that ABAP's policies, including the modification of the Variable Pension Option and the use of any pension scheme surplus in the future to be used to increase pensions you should vote for Cliff Pocock.
If you have not yet received your Ballot Paper from BA it will be with you shortly.
Please ensure you use your vote as soon as possible according to the instructions. Every Vote Counts. Please do not miss out.
2. BA AGM. Proxy Report.
The response from our Membership to the call for your BA share voting rights to be given to ABAP as proxy for the BA AGM was pretty enthusiastic for our first effort.
It gave us a block vote of nearly 50000.
Not enough to change any resolution (they were all carried) but enough to get ABAP noticed. We will certainly build on this and be back again next year.
BA shareholders present were most indignant when told that Staff & Managers had all received Bonus Payments while no dividends were paid to shareholders.
Chairman Martin Broughton reported that BA needs to achieve a 10% operating margin. It has not yet done so, and that is why there are no dividends paid this year.
The BA board having decided this, they did not approach the Pensions Regulator for his approval, and it was not therefore as a result of pension regulatory constraints that again no dividend was paid.
The shareholders present then asked BA to increase the 10% discount that they enjoy when booking flights. But no commitment was given by BA in this respect.
After the AGM, Sandra Sellers was able to have a brief word with BA Chief Executive Willie Walsh about the Variable Pension Option solution and ABAP advertising in BA publications. ABAP literature was also distributed.
3. More Pensioner Trustees.
The Pensioner& Deferred Pensioner Membership of APS is now 31507.
The Active Membership of APS is now 2364. (In Focus. July 2006)
The imbalance of 13:1 calls for an immediate increase of APS Pensioner Trustees to return to a democratic constitution of the APS Board well before October 2007.
In the same vein, during joint APS & NAPS Trustee Board meetings, currently there are 10 APS Trustees & 12 NAPS Trustees, which can tend to unbalance discussion of common issues.
ABAP suggests increasing the APS Board up to 12 would correct this imbalance.
As previously reported new legislation requires the scheme Trustees to establish a new set of Trustee arrangements by October 2007. BA pensions have written to the Committee as follows:
"The Trustees have agreed to undertake a review of the current arrangements to ensure that they remain appropriate for the Schemes and also to implement any changes considered necessary as a result of the new legislation.
The review is expected to be wide ranging and will include the make up of the Trustee Board, the length of Trustees' terms of office and arrangements for nominations."
"The reason for this letter is to establish whether, if the Trustees were minded to adopt such a mechanism, your organisation would wish to participate on behalf of Pensioners . You will note that if the Trustees were to use an organisation they need to take into account a number of Factors, including how representative the organisation is. For their initial assessment the Trustees would need to know the numbers of Members, Deferred Members & Pensioners of each Scheme who are also members of your organisation."
"The Trustees would also need to know if there are any qualifications required for membership, what arrangements you have in place to check that these qualifications are met and that you would be able to ensure that only those Members with a direct interest in an appointment would participate in the selection.
(eg Only APS Pensioners should participate in selecting an APS Member Nominated Trustee.) "
We are considering our reply.
Pensioners may feel that the present Electoral system for the Scheme is adequately democratic already and wish us to request the Trustees to "get on with it."
As the First Priority is to have more Pensioner Trustees.
4. Urgent Appeal: ABAP Treasurer/Book Keeper.
We recognise that old soldiers always say Never Volunteer. But this "Never" has not applied to ABAP, which thrives only on the voluntary commitment by Members to serve the Association.
Treasurer Jack Shill has played at least a double innings and has been there since the last Century. He has plans to emigrate , possibly to Tasmania, after the 2006 AGM.
Remembering the Talents of our Membership before they were Pensioners, please will a Member come forward to fill this vital post for a clearly defined spell.
Write to Sandra Sellers at ABAP 81 New Road Harlington Hayes Middx UB3 5BG .
5. NAPS Pension Cuts for Current Employees.
As you will expect, BA is seeking an agreement from the Trade Unions representing all Staff on the proposed cuts. The Unions are negotiating via a group of Senior Representatives. The BALPA representative is Graham Fowler, and Sandra enjoyed a cordial meeting with him recently (Although this was somewhat spoilt when she returned to find her car broken into and some valuables stolen.)
The upshot of the meeting was that ABAP was invited to join the delegation of Union representatives that met the NAPS Trustees on 21st July 2006. This is an important First for ABAP and we intend to build on it in the coming weeks.
Those of our Membership who are in NAPS will have already received an In Focus Newsletter from the NAPS Trustees. Chairman of Trustees Roger Maynard has written that "the final outcome of the NAPS Valuation process is likely to include a mixture of additional cash being provided by British Airways and reductions in future benefit build up."
Over the coming months ABAP will do all we can to support the current membership's aspirations and provide information On Request to help Members understand what exactly is being proposed.
The Unions have explored with us any areas where we can provide support (eg ABAP agrees with the current staff that annual pension increases should not be reduced to a maximum of 2.5% for the future, and that Members should be allowed to pay extra contributions if they wish.). The TU forum supports our key objectives including that the deficit in NAPS should be cleared as quickly as possible without undermining the future success of BA.
The NAPS Trustees have advised us that in their view BA can probably afford to pay a lump sum in excess of the £500m. offered ; but that BA annual contributions in excess of current levels may unsustainable.
6. Meeting with Chairman of Trustees.
As previously reported ABAP is invited to a meeting with Roger Maynard Chair of the Trustees twice a year. Sandra is meeting Roger Maynard & a representative from BA Pensions on 14th August 2006.
Members may rest assured that the Variable Pension Option will again be raised as we have taken advice from qualified experts on this matter since the last meeting with him.
Many thanks are sincerely due to all Members who have painstakingly pressed this issue with the Trustees; and have copied us in with their correspondence.
We will also raise other matters that you have written to us about recently.
This meeting is very important as it gives us a LOUD voice, so that the Trustees will know the Strength of Feeling among Scheme Beneficiaries about our Benefits and the Security of our pensions.
During September the Trustees will meet with BA to discuss funding the schemes and any rule changes to be agreed.
7. Financial Times. 4th August 2006. "Look Before You Leap."
All those who have not yet retired may be interested in this article from the Financial Times of 4th August by Lucy Warwick-Ching. She wrote:
"High profile collapses of Final Salary pension schemes and reports about rising deficits are prompting thousands of people to accept a transfer out of Final Salary pensions from former employees to safeguard retirement assets against a possible collapse of the company scheme.
Financial Advisers, Actuaries & pension providers report growing interest from individuals looking to cash-in final salary pensions..
"The relentless bad news about the collapsing pensions industry has meant some employees have been tempted to take a transfer value rather than hang on for final salary scheme promises because they fear the financial strength of their employer is shaky," says David Lamb, marketing director at St. James's Place, who has been approached by a number of clients with final salary pensions keen to switch to Self Invested Personal Pensions. (SIPPS)
Final Salary Schemes, also known as defined benefit schemes, have long been seen as something of a golden nest egg as they promise members a set income on retirement without them having to shoulder any investment risk. But these schemes have dominated headlines in recent months over fears that some companies will struggle to meet their promises. As life expectancy rises & investment returns fall, final salary liabilities for employers have been increasing.
Pensions Advisers say those members, who may have accumulated significant final
salary benefits are being tempted to transfer out of their scheme because only a small portion of their pension would be covered by the Pension Protection Fund should their employer go bust. The PPF covers only 90% of Final Salary pensions up to an annual income cap of £26050 at age 65.
Some members of BA's pension fund in particular, have expressed concerns that the company could be unable to meet their pension promises, according to some advisers. BA has proposed reducing future benefits and raising the retirement age, and has also offered a one-off cash contribution to the fund of £500m. But this has still not stopped some people from transferring.
But, before making the switch, investors need to be certain this is the best road to take. Transferring out of a final salary scheme means saying Goodbye to benefits such as known income in retirement, as well as the security of a spouse's pension.
It is also advisable that individuals do their sums before taking a transfer value. In most cases, they are unlikely to be able to replicate the foregone pensions benefits. On a typical transfer value, investors will need an annual performance of about 10% to match the pension promise they have given up, although this can vary significantly from scheme to scheme.
ABAP comments that Members who have not yet retired should be aware that the transfer values currently on offer are very poor value. Indeed the Government are considering introducing new regulations on transfer value calculations and these MAY improve the terms offered.
BA will no doubt be grateful for the reduction in pension fund liabilities for each member who accepts a transfer now as this will reduce the deficit on their balance sheet. Pensioners cannot transfer out.
8. BA Welfare & Benevolent Trust.
Should any Member know of a British Airways Pensioner or the widow/widower of a Pensioner in financial need this Trust may be able to help to make their lives easier.
The terms of the Trust enable it to help in one-off situations. In the past 2 years grants totalling £78000 have been made.
Grants have been made for replacement boilers, gas cookers, walk in showers, a bathroom floor, installing a new front door and other essential home repairs.
Other grants have been made for invalid chair power packs, and stairlifts. Please note the Trust cannot make loans or pay towards private medical treatment or school bills.
Contact your Pensioner Contact, or Julie Peters 0208 564 2500 (option6).
9. ABAP AGM October 12th 2006.
Members are reminded in good time to mark their diaries with the date of the 2006 AGM to be held at the Concorde Centre Heston at 2pm 12th October 2006.
Full documentation will follow in due course.
The Committee of ABAP 5th August 2006