NEWSBRIEF No 75
29th April 2009.
Contents
1. Pension Scheme Security
2. Effect of Deflation on Your BA Pension: Good News.
3. Pension Protection Fund
4. Variable Pensions Option: Update
5. Request for Assistance from VPO Members
6. New ABAP Website: Update
7. Staff Travel Watch: Nominations
8. BA Retired Staff Association Liaison Council
9. AGM 2009: Committee Nominations
1. Pension Scheme Security.
ABAP Chairman wrote to Roger Maynard Chairman of Trustees on March 30th. advising him of rising BA pensioner anxiety regarding the present state of the Schemes and the BA/Iberia Merger plans in the present economic conditions.
All BA pensioners are concerned about this major Proposal. The last ”press report” about the negotiations was that BA is preparing to accept a minority share in any Merger. Obviously this would make Iberia the major partner with BA part of a Spanish company.
Chairman of Trustees has recently replied (April7th) that with regard to the Schemes valuation, BA is in close contact about any recovery plan that may be required when the valuation is complete. (Members will recall that BA has a covenant with BA pensions to make good any shortfall in funds needed to cover liabilities.) He also informed us that the Merger plan is ongoing but cannot be considered by the Trustees until there is a developed proposition on the table, at which time scheme members & pensioners will be informed. Iberia is reliably reported to have no company pension scheme. Therefore ABAP is concerned that the paramount security of our schemes could be undermined, if not now then at a later date, and is seeking solid reassurances.
It is perhaps worthy of note that the absentee ownership of BAA (British Airports Authority) has not been seen as a signal success here.
There is also the difficult position of Roger Maynard the BA Chairman of Trustees. Not only is he the BA Board Member for Investment but he has been fronting the Merger negotiations. These have been underway for over a year, consequently ABAP sympathises with the position he finds himself holding but feels strongly that he should not have remained Chairman of Trustees. The situation highlights once again the case for an independent Chairman of Trustees for both Schemes. This was first raised by ABAP in 1997.
2. Effect of Deflation on Your BA Pension. Good News.
In the current economic scene British Inflation on the Retail Price Index(RPI) has fallen in recent months to a negative value, not seen since 1960.
Members should be reassured that the Pension Trust Deed prevents BA pensions from being reduced from their present April 2009 level should the RPI value for September 2009 be negative. Therefore Sept 2008 remains the minimum benchmark taken for the future level of BA pensions from April 2010.
In the same context of Good News we learn that the Trustees plan to keep the closed APS running until 2100 (AD not BST, in case you are confused.)
3. Pension Protection Fund.
This fund was set up by HM Government to help pensioners if their pension scheme failed. Not surprisingly the PPF has had increasing business as schemes fail in the current downturn. Premiums charged to surviving schemes have climbed steeply, verging on being counterproductive. HMG will now underwrite 50% of PPF liabilities, but the PPF will now only pay out a maximum Pension of £30k. p.a . Many ABAP members will now see this as the “ Partial Protection Fund ” in consequence.
4. Variable Pension Option : Update.
ABAP has been pressing the Trustees to make the necessary scheme Rule amendment to enable a review of the VPO when circumstances permit. It is no secret that the pensions scene is fairly difficult just now. It is also no secret that, in terms of the scale of the Scheme, the solution to the VPO over 10 years does not mean the lights at Whitelocke House will be burning any later at night than they are already.
The Trustees have declined to make the necessary Rule change. ABAP has already had the full spectrum of objections from the Chairman of Trustees to modifying the VPO, to the extent that having been sensibly answered by ABAP in the past they are being repeated again.
Despite the ABAP Actuarial Presentation to the Trustees in March 2008 showing that the 1984 payback model was now severely distorted due to changed circumstances, we have been told by Chairman of Trustees (March 25th.2009)that: “the real VPO issue is that some members who chose the VPO do not now wish to accept the circumstances of the personal choices they made years ago.” ABAP answered this some years ago before Roger Maynard was at BA Pensions.
ABAP reiterates that: No VPO pensioner has ever objected to the principle of what he or she signed, but these changed circumstances have meant that the balance has been running in full favour of BA pensions to the opposite detriment of those with overwhelmingly lower BA pensions. That is why they took the VPO in the first place - it needs modifying and it should be done now. Members will recall that in our last report ABAP asked the Trustees to permit the VPO issue to go to arbitration. The Trustees have been advised that the “consequences of the VPO are not disputes falling within the arbitration clause of the Trust Deed.” ABAP legal advisers do not agree with their interpretation.
As the Trustees have again closed correspondence on the VPO until in effect 2013, clearly a battle line is forming here. In the face of this position ABAP policy is to pursue the VPO issue by any legal means. (Members please see next item below.)
George Bell, ABAP President, has already been assisting our advisers and is keen to continue to do so.
5. Request for Assistance from ABAP Members.
Our legal advisers need to fully update our list of VPO pensioners.
Can you help ?
a. Please let ABAP know if you are a VPO pensioner. We need all of you. If you are not sure if you are a VPO pensioner- please contact BA Pensions at Whitelocke House tel 0208 538 2100 ask for Teresa Humphries with your staff number.
b. Please let ABAP know if you are a VPO pensioner member (under age 65) who is within 3 years of state pension age (65)
c. Please let ABAP know if you are a VPO pensioner (over age 65) who is within 3 years of starting to pay-back to BA pensions more than the total VPO you received. If you are unsure when this will be, then speak to BA pensions 0208 538 2100 and again, ask for Teresa Humphries with your staff number.
Please advise ABAP at your earliest convenience if you can help with any of the above at:
ABAP/VPO
Unit10
Solent Industrial Estate
Hedge End
Southampton
SO30 2FX
or contact Dayne Markham on 01 489 782 637 tel. or fax
or email daynemarkham@hotmail.com ref VPO
or email david.waddington@zen.co.uk ref VPO
6. New ABAP website: www.abaponline.org
As announced in Newsbrief 74 the construction of this wholly ABAP sponsored site continues.
It is the official site for the Association.
The committee through the Chairman has sole editorial control.
Newsbriefs will appear in full.
The Newsflash facility for urgent pensions matters will continue.
7. Staff Travel Watch.
The ST Watch will be for all BA pensioners whether in ABAP or not. But if, as is democratically proper, the Watch is to be elected at the next ABAP AGM this limits those On Watch to be ABAP members.
Candidates for ST Watch, who must have internet facility, will be published with AGM papers. Nominations to be returned by July 31st 2009.
Please register with David Waddington including a 5 line personal profile - david.waddington@zen.co.uk
The ST Watch will be an affiliated subordinate body for Staff Travel matters only. Currently as a temporary measure the ST Watch is a set up from the STWG with additional volunteers. As the ABAP Liaison STWG member Dayne Markham is the now ABAP Chairman his place On Watch has kindly been taken by Alan Murgatroyd an ABAP founder member - meadmurg@xtra.co.nz
8. BA Retired Staff Association Liaison Council.
In the interests of all BA pensioners ABAP has informally explored a form of liaison channel with the LC. Although ABAP individually remains on good terms with LC individually, it has become clear that until all pensioner representatives are elected by the same transparent procedure used by BA Pensions for Pensioner Trustees as a common foundation there will always be a fault line that has historically caused problems for pensioners. ABAP will also take steps to improve transparency.
9. AGM 2009.
In keeping with the decisions from AGM 2008, the papers for AGM 2009 will be sent out with profiles of prospective candidates for the ABAP Committee 2009/2010.
Please send in nominations for the Committee by July 31st. accompanied by your 5 line personal profile.
Register with david.waddington@zen.co.uk
STOP PRESS BA pensions increase for 2009 is 5% based on September 2008 RPI.
Members please note that the CPI (consumer price index) is never used.
The Committee of ABAP 29th April 2009