British Airways Pensioners Association


	News About ABAP Previous News Current Newsbrief Previous Newsbrief Why Join ABAP? Membership Application Events Association Objectives The Committee The Trustees Contacts Join Mailing List Join Forum Links Membership Forum		Newsbrief No. 65 1st November 2006. Contents 1. AGM Report Oct 12^th. 2. Pensions Act 1995 Section 67. 3. Letter to Your MP. 4. Variable Pension Update. 5. Staff Travel. 6. OPA. 7. ABAP Change of Address for Subscriptions and Membership Changes. ===================== 1.AGM Oct 12^th Chair Report Welcome to our 16^th Annual gathering. I am delighted to see so many regular and new members present. This year the meeting will be conducted in a slightly different way. At the AGM the entire membership has the right to participate and can raise matters of concern, but not everyone can travel to the Concorde Centre. Last year 687 proxy votes were sent in by members who could not attend - outnumbering the members present so all resolutions were passed regardless of the voting on the day. In trying to improve the democracy of the association this year some mistakes were made such as asking for a vote on my report before it had been given and the element of debate was removed from the resolutions. But we did receive a much increased response, a total of 1252 in favour plus another 424 votes with Committee proxies. Improvements to the process will be made next year. Membership has increased sharply in 2006. We have made our presence felt. I have met Roger Maynard, Chairman of both Schemes Trustee Boards three times. Progress has also been made in getting recognition alongside the Trade Unions. While continuing with more Newbriefs & postcards than last year, ever increasing use is made of our website www.abap.org.uk thanks to our Webmaster, who gives his time freely and has done a fantastic job. Our frequently updated site, comes up near BA pensions own website, ensuring BA notice the role we play in keeping you all informed. Pensioner Trustee Election. I want to thank the Membership for their efforts in responding to our campaigns. At the Pensioner Trustee Election Capt Cliff Pocock was re elected with 8927 votes, 82.5% of the votes cast. In 2007 the Trustees will make changes to the composition of the Boards. We are working to place more Pensioner Trustees on both Boards. Co operation with BA Pensioner Groups At the 2005 AGM we were asked to write a manifesto and work with other pensioner interest groups to raise awareness of ABAP. Last month John Bennington attended a Committee meeting and has agreed to take on this essential role. BA has reduced its support to the RSA & Pensioner Contacts thereby increasing the value of membership of ABAP as we can get things done. I attended the BA AGM in July on your behalf for the first time. Despite BA paying no dividend, staff & management received bonuses. Shareholders do not grasp that with a pension debt of £2.1bn and BA worth £2.9bn, they own little more than part of the pension debt ! NAPS Deficit. NAPS in 2003 had 77p for every £1 of pension already promised to its 69000 members but the Deficit has grown despite payments by BA & Members. It is understood that a preliminary assessment for the Trustees shows the actuarial deficit has grown from £928 in 2003 to about £2.1bn at this valuation. Interest rates are lower year on year. These falls are now more significant than rising equities. We do not have the 2006 Valuation result, but I have been told that the NAPS deficit has increased because pensioners' longevity is increasing. Pensions cost more when they are paid for longer. We do not have the result for APS other than there is no surplus. ABAP remains very sceptical that APS pensioners are expected to live longer than NAPS pensioners even when told by the Chairman of Trustees that the facts bear it out. In 2003 ABAP noted that NAPS assumed longevity seemed low. Probably this was done to make the deficit as small as possible. This Valuation, the improving trend has been noted by the Actuary & Trustees. Cynically this could be to make the deficit so large it would justify the proposed benefit cuts and scare the TU into accepting them. It is legal for an Employer to agree changes for the future with its Employees. It is only possible to cut costs of employment from the present on. This does not reduce the deficit. We know that BA have proposed cuts for the future of NAPS to the Unions, who are trying to make them a small as possible. Any cuts in benefits have to be approved by the Trustee, the Law requires a funding plan to be agreed with BA. The matters are now linked, with the Trustee set to agree a contribution plan that will remove the deficit over time, together with a reduction in pension benefits earned by staff after April 2007. NAPS Members meeting with Trustees. Those in NAPS who are still contributing have called a meeting with NAPS Trustees so you can tell them what you think is acceptable. Please make sure you attend this meeting on 30^th October. The Future of the NAPS Deficit. ABAP & the Unions want BA to clear the NAPS deficit as quickly as financially possible. We want the Pensions we have paid for to be paid in full and this needs BA to agree to pay for them. BA wants to spread the cost over many years. The new Pensions Regulator has suggested that a usual recovery plan would clear the Deficit within 10 years. BA has stated that increasing its contributions increases its cost base making it harder to run a competitive business. If further increases were proposed to remove the deficit it would be hard to square the circle. So the Trustee has hired accountants PWC to find whether BA can afford to pay more without risking its survival. They advise that BA can afford to pay more than the £500m lump sum offered, but that larger annual contributions to NAPS might not be sustainable. Negotiations continue between the Trustee & BA, both keeping the Regulator informed. BA expects the deal to include a charge on certain assets to the scheme and paying off the deficit over 20 years plus. This means NAPS will continue to run the risk for the rest of your life that if BA becomes insolvent you will not receive all of your NAPS pension. Consequences of BA being Insolvent Let me remind you that should BA become insolvent, the Pension Protection Fund will ensure you receive at least some monies. The current offer is to ensure those over retirement age continue to receive their pension but future pension increases will only be paid on pension earned after 6 April 1997. For those not at scheme retirement age only 90% of pension will be paid . In no case will the PPF pay more than the equivalent of £26000pa at age 65. Should BA be sold, then the buyer would have to agree to take on the pension scheme debt. With BA worth so little more than the debt it is hard to see it being worth the buyers' time. The Pensions Regulator expects the Trustees to ensure that the buyer was financially able to take on the debt and pay it off over time, or that BA put the proceeds of the sale of the company into the scheme. ABAP now has to consider whether to oppose a long period of risk while BA pays off the deficit by writing to the Pensions Regulator complaining he has sanctioned a recovery plan over too far a time horizon. The Committee has asked Louise Inward, who used to work in a senior role with the Pension Regulator and now works for PWC to talk to us today about the work of the Regulator. Future Pension Increases I note that some Members are hoping that BA will increase their Pension. Like Oliver Twist we would all like more. Today only MPs & government employees have an employer willing to take on more debt to pay bigger pensions. We know that the cost of living in a household headed by a 75year old is 67% higher than a household headed by a 30 year old. Why? Because a higher proportion of our income is spent on food, fuel and health. We need to lobby our MPs to get a higher state pension with a realistic basket of goods measured to get a true Retail Price Index. As an association we belong to a much larger grouping of pensioners called the Occupational Pensioner Alliance. A letter has been drafted encouraging Pensioners to write to their MP asking that state pensions be linked to average pay increases. (Click here to download) ABAP and Other Schemes ABAP works on behalf of all those whose pension is dependent on BA. We therefore do need members to come forward with knowledge of British Caledonian & Dan Air. But we can do little for those whose employment was transferred out under TUPE regulations to another company with their BA pension transferred into their scheme. Many people have made decisions about their pensions that they come to regret. Taking a transfer is always very important; NAPS1 to NAPS2, BA to your own plan or to another Employer. ALWAYS take professional advice before moving pensions. Age Discrimination Legislation. Some Members have asked about the new age discrimination legislation. This starts on 1^st December 2006 so it is too early to tell how it will affect us. However the exemptions will allow BA pensions to continue to reduce the pensions of spouses more than 10years younger. This is justified in view of keeping the cost of paying the spouses pension broadly equivalent to the total cost of a pension for a spouse only 3 years younger. 2006 Membership Card & Running the Association. Let me pause to thank my fellow Committee Members for all their time & effort. Especially Jack Shill our Treasurer who has served 13years and is standing down from this office today. He receives our sincere thanks and a Presentation. The Association is large & successful, the tasks many & time consuming. These include mail collection, opening mail, recording addresses, banking cheques, keeping accounts, paying bills, writing Newsbriefs, arranging printing and co ordinating with the Webmaster. For the last 16 years this has been undertaken by volunteers who have not claimed a penny for their time or petrol. You will have noticed that the Membership Card for this year cannot give details of Committee members for Membership or Subscriptions. This year we need new volunteers to take on these tasks Or do we pay for these tasks to be done ? The Committee offered £500 for a Treasurer, but we still no one has agreed to take on the role. Should we offer more, say, £2000 as has been suggested. Do we need to pay for a Membership Secretary ? Is there anyone willing to step forward ? If not we will hire a professional firm to do these tasks. It will cost money but they need to be done. We have two firms willing to take on these roles.... Flat Rate Subscriptions I have been asked why we do not have flat subscriptions. The answer is that they are tiered to reflect the level of pension we are working to protect. The Chair ended her report by reminding Members that 2007 is going to be an important year. So please support your Association with time & money. Treasurers Report. The Audited accounts had been published and circulated before the Meeting. Jack Shill, the Treasurer answered questions arising. There was a query on the payment of bank charges. Jack explained Lloyds had charged so we had changed to Barclays Bank who did not. Resolution 1. Acceptance of the Chair Report: Carried. Resolution 2. That the Policy for the coming year be approved : Crried. Resolution 3. Acceptance of the Accounts & Treasurers Report: Carried. Resolution 4. That the Auditors, Rice Associates be reappointed a0d the Committee set their remuneration : Carried. Resolution 5. The election of Committee Members : Carried Resolution 6. That remuneration be paid to professionals : Carried Resolution 7. That the present Subscription levels should be maintained for 2006/2007 :Carried Resolution 8. That the Subscription to OPA should be renewed : Carried. (see note below) Resolution 9. That ABAP hire professionals where their special skills are required in pension matters : Carried. The ABAP Committee Members 2006/2007. Sandra Sellers. Harry Heap. Dayne Markham. Keith Bretherton. Graham Tomlin. Jack Shill. Sheila Miles. John Bennington. Any Other Business. The meeting was opened for any questions or comments from those present. The AGM closed at 4pm Louise Inward. Recently held a senior position with the Pensions Regulator and is now with accountants PWC. Her talk covered what the Pensions Regulator can and cannot do. The Regulator came into being because OPRA was found not to be strong enough. His duties are : To protect the Members of Pension Schemes. To reduce calls on the Pension Protection Fund To reduce calls on Government administration The Regulator cannot stop pension schemes going bust, but he can encourage Employers to put in more funds. Regulatory Powers : A Moral Hazard. Stopping Schemes avoiding their liabilities. The Regulator cannot approve a Fund. 3 The Regulator cannot prevent payment of dividends. (He can approve the payment of cash into funds as well) The Regulator can approve Scheme Funding for a Pensions Objective. She also covered Employers & Trustees Negative Payments and The Risk Based Levy,( only 300 schemes out of 1800 avoided paying it) She confirmed the Regulator had looked at a 10 year deficit recovery plan for BA And recommended that : The Association meet with our Scheme Trustees on a regular basis. Members should actively support ABAP. Members should refer to the Pensions Regulator Website to keep up to date. This was a very professional talk from one at the heart of Pensions legislation and she was rewarded by some searching questions and a round of sustained applause. 2. Section 67. The Pensions Act 1995. Pensioners should read what follows closely & tell your friends. Under current law the security of your pension depends on BA surviving. While BA is solvent it cannot legally stop or alter your Benefits. However the Dept. of Work & Pensions (ie HMG) is considering changing this law. This law is called Section 67 of the Pensions Act 1995. It Prohibits Any Changes to Accrued Benefits Without the Consent of Members. The DWP are reviewing this law to decide whether to allow Employers to renege on pensions already earned. This has been reported in the press as follows: Officials at the Dept for Work & Pensions have been discussing: A DWP spokesman confirmed Section 67was among the issues under discussion as part of HMG's deregulation Agenda, he said: "NOTHING AT THIS STAGE IS RULED IN AND NOTHING IS RULED OUT." We have no details of what they may do just yet, but the threat is very real, if BA could cut NAPS benefits this would be a solution to the Pension deficit problem. This why belonging to ABAP is so important as we need to lobby the DWP in our thousands to ensure any change in Section 67 still protects all our pensions. The more Members whose Names & Addresses we have the more we can act together to make our voices heard . James Purnell ( Minister for Pensions Reform) has written in September 2006 that "The review (of Section 67) has no plans to consider changes to rules affecting current pensioners." This is not nearly strong enough. ABAP demand the DWP make an unambiguous public statement on the review of Section 67 without delay or prevarication. 3. A letter is attached on Section 67 for you to send to your MP. (Click here to download) 4. Variable Pension Option. This subject continues to fill the ABAP mail bag. The basic positions have not moved. Members see the option as loan to be repaid. The Trustees continue to see it as a gamble taken out by Members who accepted the terms. The issue here is the fact that the Actuary made a guess about longevity and interest rates and got them both badly wrong so the gamble taken by Members was unbeknown to them distorted from the start. Although out of date mortality tables were used to set up the option, the Trustees today maintain this was acceptable as accurate at the time. Yet Mortality rates for the last 30 years have been continually updated by the actuarial profession and show steadily increasing longevity at each check. To recap, the Trustees position following discussion is: It would be unfair on those who did not take out the option to help those who did. Those who died before repaying are not complaining ? That all beneficiaries must be considered when spending the scheme monies. There are not sufficient monies in the fund. Have any other pension schemes revised terms once a pensioner has accepted them ? Clearly ABAP must move this on with professional advice both legal & actuarial. We are also consulting the membership of the Occupational Pensions Associations to find other similar schemes affected, for advice to the Trustees. John Birch( Pension Scheme Secretary) has now confirmed in writing that the APS Trustee has unilateral power to change the Option rules if they chose to do so. ABAP has raised the Variable injustice privately at the BA AGM with Willie Walsh, BA Chief Executive, and in writing to him, repeating our suggestion that the Variable should cease at 80 years of age. During 2007 we plan to ask Pensioners to use their right to call a Meeting with Trustees to discuss the Variable. We can do this once we have 100 or more Pensioner signatures. The petition is running now. Send your details to: ABAP Petition, 81 New Road, Harlington, Hayes. Middx. UB3 5BG 5. Staff Travel. This presently falls outside the scope of ABAP and is rightly a concern of the Retired Staff Association. We really confirm that we do not have the resource to take on this matter. OPA. The Occupational Pensions Alliance is carrying out sterling work. They are an umbrella organisation for many pensioner groups. ABAP is a Founding Member. Our contribution is 4p per member with a max sub of £400pa. NEW!! ABAP Address for Subscriptions & Members Change of Address. ========================================================= Please send any cheques or changes of address with the Name and Staff No. of those concerned to: ABAP Unit 10 Solent Industrial Estate Hedge End Southampton SO30 2FX Reminder. 2006/2007subs are due. Good News From the FT Oct 16^th. "The RPI for September was 3.6 which is the highest since 1996." This is the increase percentage for BA pensions & State pension to be paid in April 2007. The Committee of ABAP 25^th October 2006.