News flashes
NewsBrief 91 is now available for download by clicking here.
We have also provided a template letter to use for your appeal if your complaint against the use of CPI is rejected by the Trustees. This can be downloaded here.
E-Petition RPI/CPI
The E-petition calling for a debate on the switch from RPI to CPI received over 107,000 signatures. John McDonnell MP for Hayes and Harlington, put the case for a debate to the House of Common Back Bench Business Committee and has secured a debate on Thursday 1st March.
This is short notice, but a briefing will be sent out as soon as possible. Please encourage your MP to join in the debate.
Use of CPI by the Secretary of State
The Appeal against the Judgment to reject the Judicial Review of the Secretary of State's decision to use the CPI has been heard in the High Court over the last two days. As soon as any information is available we will publish it.
NAPS Postal Ballot and NAPS Trustee Election Results
The results of both the Postal Ballot and Trustee Elections have been published by BA Pensions. For full details, where the results can be seen as .pdf files, follow this link, but to sum up:
Pensioner Trustee Election
The NAPS Pensioner membership elected Mr Graham Fowler as a Trustee. 18,069 ballot forms were sent out and 6,853 votes were cast by post, internet and telephone voting.
Graham Fowler received 2,578 of the votes cast;
Nikki Jones received 1,556;
John Kennedy 1,049;
Andy Webb 825;
Marilyn Leather 621;
Raj Tangri 224 votes.
Congratulations to Graham Fowler, whose term of office commenced on 9 February 2012.
Postal Ballot
NAPS Rule 27 (b) contains provision for Members and Pensioners to request the Trustees of NAPS to undertake a postal ballot. As per the requirements of Rule 27 (b) 100 written requests for a ballot were received from NAPS Members and Pensioners. The requests detailed the four questions to be included in the ballot to be sent to all active Members and Pensioners in receipt of their pension. The ballot papers were despatched by post on 28 December 2011 with a close date of 31 January 2012. 44,497 papers were sent out, with 14,453 returned - a turnout of 32.5%.
The four questions asked and the responses were as follows:
Question 1: Do you agree that the NAPS Trustees should exercise their powers to influence BA into agreeing to a supplementary deed to clause 16 of the NAPS Scheme Rules giving Trustees discretionary power to award discretionary benefit increases as per rule 15 of APS, thus maintaining parity with APS?
Number voting YES ........................... 13,675 (94.7%)
Number voting NO ............................. 519
No vote ........................................... 241
Spoilt vote ....................................... 1
Question 2: Annual increases in NAPS pensions have been based on the Government’s Annual Review Orders which, until the June 2010 Budget, used the year-on-year increase of the Retail Price Index (RPI) in September to increase pensions. In the 2010 Budget the Chancellor changed the index he used from RPI (Retail Price Index) to CPI (Consumer Price Index). CPI was only introduced in 1996. Since its introduction, CPI has only been higher than RPI during September on four occasions. Accepting that in the occasional year CPI may exceed RPI, but that the history and the expectation is that RPI will usually be higher than CPI (last September it was 1.5% higher). Do you agree that it is in the best interests of NAPS beneficiaries that the Trustees should amend the NAPS Trust Deed and Rules so that in future annual increases are not determined by the Government but are “hard-wired” to RPI so that all NAPS beneficiaries can continue to receive RPI increases?
Number voting YES ........................... 13,548 (93.8%)
Number voting NO ............................. 661
No vote ........................................... 226
Spoilt vote ....................................... 1
Question 3: Do you agree that the NAPS Trustees should retain and continue a funding target sufficient to pay RPI Pension increases?
Number voting YES ........................... 13,715 (95%)
Number voting NO ............................. 476
No vote ........................................... 244
Spoilt vote ....................................... 1
Question 4: Do you believe that the NAPS Trustees should restore RPI increases with immediate effect and the increases back dated to April 2011, thus meeting member’s expectations?
Number voting YES ........................... 12,997 (90%)
Number voting NO ............................. 1,270
No vote ........................................... 169
Spoilt vote ....................................... 0
Jaguar Land Rover restores RPI link for all members
From Professional Pensions, 18 Jan 2012, By Jack Jones
Jaguar Land Rover has restored the link to the Retail Prices Index for 1,000 of its pensioner members after union negotiations.
Former Ford employees from the firm’s Halewood plant previously had their benefits linked to the Consumer Prices Index after the government’s decision to switch inflation measures used for uprating benefits.
These ex-workers had contracts which mirrored pay and conditions at Ford. When Ford changed indexation measures for its own scheme in response to the new legislation, Jaguar Land Rover did the same for this section of the membership.
Other members of the scheme had RPI-linking ‘hard-wired’ into the scheme rules and their benefits were unaffected.
But following negotiations with Unite, the firm said it had agreed to reinstate RPI as the measure of inflation used to calculate future benefit increases for all members.
Unite national officer Roger Maddison said: “This shows that Jaguar Land Rover is not limited to mirroring Ford’s terms for these workers – they can go beyond that if they want to.”
A spokeswoman for the company said: “As a result of regular conversations with Unite, we have aligned the benefits for workers in Halewood with the rest of the workforce.”
Last year both indexes were above the scheme’s 5% cap and therefore the change did not make any difference.
But the Office for Budget Responsibility has forecast that the CPI will be on average 1.4 percentage points a year lower than RPI – potentially slashing 18% from the value of members’ benefits.
Good news for JLR workers, and good that the company has chosen to use RPI, just as BA pensions are able to do. However, please note that figure in the last line - 18% might be lost from your pension if CPI remains in force, and also, remember that every year that CPI is in place you lose money that will never be recovered (unless BA pensions retrospectively revert to RPI, which seems unlikely given their present stance).
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e-Petition to reintroduce RPI
Members might like to know that the above petition, which can be found at direct.gov.uk, now has (as at 3rd January 2012) over 105,000 signatures - it only needed 100,000 to get a debate in Parliament, so well done all! Watch this space!
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September CPI & RPI figures, likely 2012 increases, and Dr Ros Altmann's view on pensioner inflation
Sandra Sellers has advised that September numbers for inflation indices are CPI 5.2% and RPI 5.6%. If things remain as they are this means that the APS increase due in April 2012 will be 5.2%, and NAPS 5%.
Ros Altmann & Saga have recently calculated that those aged between 50 and 64 are suffering real inflation of 6.6pc, while those aged between 65 and 74 are seeing prices rise by 6.4pc. In other words, whichever BA scheme you are in, and, regardless of the index applied, your real purchasing power is declining. A sobering thought.
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CPI vs RPI
Members should all by now be familiar with this key element of the argument: Is CPI an appropriate index for APS? ABAP, via Mike Post, has taken expert advice from Mark M Courtney, D.Phil. (Oxon), formerly Deputy Director and Head of Economics, Regulatory Impact Unit, Cabinet Office, some time Senior Lecturer in Economics, Rhodes University. Dr Courtney has written a paper which covers the background and history of the CPI: what its purpose was and how it was developed; the details of the CPI‟s construction and how it performs as a price index in practice; He then draws conclusions about CPI's appropriateness for cost-of-living adjustments.
His conclusion is that: "The CPI as currently calculated in the UK exhibits a significant and systematic under-estimate of the overall cost of living, because it does not cover owner-occupied housing. It also exhibits a significant and systematic under-estimate of the cost of living because it uses the Geometric mean for first-stage aggregation in the context of a price collection and sampling system that was designed and developed for a different technique of first-stage aggregation, namely the Average of Relatives. This means that the CPI is not an appropriate index for the Airways Pension Scheme to use in order to measure and adjust for changes in the cost of living"
A copy of Dr Courtney's report has been sent to the Trustees.
The full report, in .pdf format, can be downloaded by following this link.
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Early Day Motion
To date, 133 MPs have signed Early Day Motion 1032 which calls for a postponement of the use of CPI for the indexation of benefits and pensions until its appropriateness has been fully evaluated. And they are still signing; the most recent signature is dated 13/07/2011. The full EDM reads:
"That this House notes the Government's proposal to use the Consumer Price Index (CPI) rather than the Retail Price Index (RPI) for the price indexation of benefits, tax credits and public service pensions; further notes that the CPI is consistently lower than the RPI; expresses concern over the impact that this will have on the incomes of pensioners and other vulnerable groups; recognises the concerns held by the Royal Statistical Society and the UK Statistics Authority that CPI excludes many housing costs which are borne by the majority of pensioner households; and calls on the Government to take these concerns into account and postpone the change from RPI to CPI until the appropriateness of CPI as a measure of price increases borne by pensioner households can be fully evaluated."
Has your MP signed EDM 1032? Go to http://www.parliament.uk/edm/2010-12/1032 for the full list of signatories.
If your MP has not signed, why not write to ask him or her why they have not signed? You can find details of your MP at http://www.theyworkforyou.com/
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APS RPI Campaign - take action now!
It is now time to start the campaign against the APS Trustees for the imposition of CPI pension increases. Part 6 APS beneficiaries should now submit individual complaints to the APS Trustees, as explained and set out here.
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APS Trustee Election results: Member Representatives
The APS Pensioners have elected Captain Cliff Pocock, Mr Paul Douglas and Mr Graham Tomlin as Pensioner Trustees. Votes cast were as follows:
Captain Cliff Pocock | 8,286 |
Mr Paul Douglas | 7,080 |
Mr Graham Tomlin | 7,064 |
Miss Caroline Gill | 1,405 |
Mr Alan Pope | 1,236 |
Mr Ian Heath | 973 |
Mr Aidan Brown | 942 |
Total votes cast | 26,986 |
Well done to all three, and thanks to all APS members for their informed support! ABAP also wants to thank those other candidates who stood but were not elected on this occasion. It is clear that they are all of the highest quality and we are fortunate indeed that they decided to put themselves forward for the onerous task of being a trustee. It is to be hoped that they will involve themselves in the activities of ABAP so that ABAP can continue to be a major force for good in protecting APS pensioners’ rights and interests.
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You can now donate to the ABAP Fighting Fund online. Click on the Fighting Fund menu button on the left-hand side of the page, or click on this link.
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BA CPI/RPI in the press Sunday 10th July 2011
There are three good articles in today’s newspapers about the APS scandal.
These are in The Sunday Telegraph, B6, “BA faces fresh challenge over pension cut”, The Mail on Sunday, page 82, “The pension index rebellion” – sorry about the picture! – and The Observer, “British Airways flies into new storm over chancellor’s pension increases”.
All three articles are good. However, the Telegraph and Observer journalists fall into the common trap of stating that the reason that CPI is normally less than RPI is because the CPI does not include housing costs.
The truth is materially different. Less than 10% of the difference is down to the exclusion of housing costs from CPI. Most of the difference, 92%, is because CPI does not simply compare the cost of items now as against the previous year, as RPI does, but makes adjustments downwards assuming that as some prices rise people will switch to cheaper products. This is fine if you want to understand how much the change in national economic activity
is down to price increases and how much is genuinely change in the volume of activity, but it is a swindle if you are trying to preserve spending power. For those who want a source of this information, it is all in the Impact Assessment that accompanied the Government’s recent Pensions Bill. This shows that the Government is forecasting the difference between CPI and RPI to average 0.87% of which 0.07% will be housing costs and 0.8% will be driven by the trading down effect, what is often called the “formula effect”. You will also hear statisticians talk of geometric averaging for CPI and arithmetic averaging for RPI.
Many of you have written to your MPs, thank you. It is by working together that we will defeat the outrage that has been perpetrated on our pensions. The MPs have often written to Steve Webb, the Pensions Minister. His standard reply to MPs gives the game away so far as the APS trustee board is concerned. Mr Webb writes: “The methodology uses to calculate CPI takes into account the fact that many people tend to trade down to cheaper goods when prices rise – the RPI does not. This contributes a significant portion of the gap between the CPI and the RPI and is known as the ‘formula’ or ‘substitution’ effect.
We know, and the APS trustees should have informed themselves, that the CPI is not, and was not, designed to uprate pensions. Its effect when used to uprate pensions is, as the Pensions Minister explains to MPs, to drive down the standard of living of pensioners. Now that is fine for the Government to do that, if they so wish, they must account for their actions to the public sector workers and to the electorate. But the APS trustees are in a different
position entirely. They are required to act in the best interests of their beneficiaries. In contrast to NAPS, the APS trustees have the unique, unilateral power to do this without BA’s consent. The APS trustee board must be held to account for their failure to retain RPI increases.
Incidentally, the fact that the Government is forecasting a difference of 0.87% between CPI and RPI means that the present value of APS pensions lost to us will be nearer £400 million than the more conservative £270 million shown in the BA accounts.
If you are coming to Ascot tomorrow, please remember to bring your tickets!
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Newsflash 17th May 2011 - ABAP Video - Jamie Bowden interviews Pocock, Post and Tomlin
You may now see on a video of former British Airways press spokesman, Jamie Bowden, interviewing Cliff Pocock, MikePost and Graham Tomlin. They are the three trustees who recently resigned from the APS trustee board over the failure of the APS board to act in the best interests of the APS beneficiaries. The board recently voted not to continue to pay RPI increases.
Please share this with your friends!
...and if you should feel the need to write to your MP about this, click on this link to go to TheyWorkForYou.com. It is an easy way to find out who your MP is, and how to contact them.
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Newsflash 15th May 2011 - ABAP now on facebook 
Click on the facebook logo to link to our wall
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New members
We have been pleasantly surprised, and a little overwhelmed by the recent surge in membership applications, particularly those made on-line. Please don't worry if you don't hear anything for a little while: all applications are being processed, and membership cards will be despatched asap. We are also collating forms from those applicants who indicated that they might be able to give some time to ABAP, and/or stand as a Trustee, and those will be discussed at our next Committee meeting in May - we will get back to you!
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