Newsbrief No.85
17th April 2011
Contents:
1. Calling ALL APS & NAPS Members & Pensioners. plus e-mail addresses request
2. The Problem for all of Us
3. The Solution for all of Us
4. The RPI Fighting Fund
5. Captain Mike Post
6. Captain Cliff Pocock
7. Mr Graham Tomlin
8. APS Members Meeting.
9. NAPS Widows/ers Annual Increase Index
10. VPO Report
11. Where are they now?
1. Calling ALL APS & NAPS Members & Pensioners. Rapid communication is vital for the CPI/RPI Campaign.
Please send your email address, Name, S/No and date of retirement to daynemarkham@hotmail.com. Members already on the ABAP e-list for Newsbriefs etc. do not repeat. We can take you from that list for this wider list.
In APS there are now c.800 actives, 20000 pensioners, 7000 dependent & 2000 deferred pensioners. In NAPS there are 24000 actives, 18000 pensioners, 2000 dependents & 22000 deferred pensioners.
Everyone in both schemes is or will be affected by the change of index to CPI from RPI. The effects on pensioners are similar to but not the same as the Mirror Group pension scandal of the early 1980s that led to an overhaul of private pension schemes and the way they were then run.
EVERYONE WILL LOSE OUT BADLY.
ABAP says again if the scheme does need shoring up the employer & trustees must make provision- not by cutting the benefits of pensioners that they have specifically paid for. Clearly to anyone in the BA pensions APS or NAPS schemes it is absolutely essential to react as much as possible to maintain the RPI index for our schemes as has been calculated in the 2010 recovery plan also APS is well covered at least until the next Triennial Valuation in 2013.
ABAP Members will by now be aware, following increasing warnings from the Committee that it had become increasingly difficult for the APS Trustee board to agree on the inflation index to be used for annual pension increases following the Govt. ruling on the Consumer Price Index that affected the BA schemes almost by accident as the Trust Deeds for both schemes still read in this matter as if BA was a Nationalised corporation when it is history that John (Later Lord) King achieved the privatisation as long ago as 1987. BA Pensions, following the Govt Annual Review Order, have used the well established Retail Price Index as for many years it has been the only valid index. Our Schemes are not necessarily lashed willy nilly to the Annual review order. APS may change its Trust Rules without BA consent. (NAPS was set up without this facility.)
Provided always that any proposed change is within the capabilities of APS, “denationalising” by rule change is straightforward. If APS is left without a rule change in this matter, the pensions received by pensioners of both schemes will be reduced by 20% over a 25 year retirement by the use of CPI. Such is the power of compound interest working in this case against your RPI increases. If APS achieves the necessary rule change and 2/3rds voting majority, then NAPS should follow suit as up to now they both had RPI. NAPS has finally been told (a month after APS) that CPI will be the index for annual increases in future. So what APS gets in this case, NAPS also gets as well. Likewise, when RPI returns.
2. The Problem for All of Us.
With APS Trustees leading, as explained above, to achieve a Rule Change to leave the Annual Review Order, or by the Discretionary Rule to increase the index it has been impossible to have any rule change as there is not a 2/3rds majority or simple majority for support on the APS Board of Trustees. It has been stalled for months so currently the unchanged, still “nationalised,” Rule decrees the Annual Review Order that this year for the first time is CPI - some 1.5% less than RPI As the Pensioner Trustees clearly all would have voted for a discretionary increase it appears algebraically to ABAP that all the BA appointed Trustees & Chairman of the Trustee Board voted against this modest proposal.
Members of both APS & NAPS hardly need reminding that they were paid no annual increase for 2009/2010 because the “marker” month of September 2008 registered inflation as –1.5% yet there was subsequent inflation. However our schemes had surely expected to pay some increase for 2009/2010, as until the Banks faltered in September 2008 our UK economy was stable. So currently the scheme is in pocket & clearly quite able to pay a small discretionary increase this year with no risk to the recovery plan of either scheme.
ABAP finds this situation most disturbing as an insight into the attitudes of the dissenting members of the APS Board.
3. The Solution for All of Us.
The APS Trustee Board is disabled as seen above. This leaves CPI as the index invoked by the unmodified Trust Deed. The problem therefore is unsolved. All APS & NAPS pensioners will now move onto a wider stage where the apparent mishandling of the CPI/RPI issue against the interests of pensioners can be openly discussed and as not justified, rapidly corrected under the full view of all pensioners. It should be seen as an organised move by the grey power of pensioners.
We are not a load of old Has-beens ripe for conning on the doorstep. The £700+ million that BA will save if CPI prevails in our schemes is money that will be taken out that was planned to be paid to BA pensioners present & future. The Association has retained top Legal & Actuarial CPI/RPI Advice & Counsel with the ultimate intention of going to the High Court to stop this devious opportunism in its tracks. Members already know a Members Meeting will be held with the APS Trustee Board & Chairman, Mr Paul Spencer. (See below for further details).
Our aim is that the scale of this meeting will bring full reconsideration into play.
4. The RPI Fighting Fund .
Whether you are APS or NAPS or not yet a member of ABAP you may help ABAP pack a mighty NO effort against the introduction of CPI on behalf of ALL BA pensioners. BA Pensions started this dispute. ABAP considers that BA Pensions should shoulder the cost to the Pensioners of obtaining Justice. This has not yet been agreed with BA Pensions. Naturally ABAP has some funds but legal fees seem to increase faster than our membership. Currently we must face rates in the order of £480 per hour including VAT for this campaign both for top Lawyers & Actuaries. Good Counsel will be more.
Therefore members may simply send a cheque to:
“ABAP RPI Fighting Fund”
The ABAP Treasurer
41 Linkway
Crowthorne Berkshire
RG45 6ES
The response to this appeal is important to show we mean business; but the Committee recognise that many pensioners may not wish to contribute to this fund if eventually our legal costs are covered by the Pension Scheme. Therefore it has been suggested to show the necessary support, but not actually pay right away, pensioners may consider starting a Standing Order arrangement with their Bank to pay ABAP a certain sum, say monthly; but starting on 1st August 2011 by which time the costs issue should have been resolved one way or the other.
In this case, Members pledge support but do not actually pay out unless it proves absolutely necessary, only needing to advise the ABAP Treasurer separately of the amount of support pledged.
The name of the Account: “ABAP (RPI Fighting Fund)”
Sort code: 20-11-74
Account No: 53246884
Should BA Pensions accept that they will pay our costs, then members simply cancel the Standing Order arrangement but the degree of support has been shown without paying. Many thanks to everyone for whichever arrangement they wish to use.
5. Captain Mike Post.
As is now widely known Capt. Post resigned as an APS Trustee essentially to act as an APS pensioner without the constraints of being a Trustee. He is now on the ABAP committee. BA Pensions are sending out a ballot on the questions he is raising about the past conduct of the previous APS Trustees between 1983 & 2002.
The three questions to be asked in the ballot are:
1. Annual increases in APS 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 the RPI to the Consumer Price Index (CPI). 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 the 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 APS beneficiaries that the Trustees should amend the APS Trust Deed and Rules so that in future annual increases are not determined by the Government but are “hard-wired” to RPI so that APS beneficiaries in Part VI can continue to receive RPI increases?
Yes or No.
2. During the period covering privatisation from 1983 to 1990 there were, amongst other matters, numerous amendments made to the APS Trust Deed and Rules at meetings which were inquorate for amendment purposes. One such amendment was made “to bring APS into line with NAPS” which gave British Airways extensive powers to order the spending of APS surplus as it emerged. This depletion of APS funds may have contributed to the present APS deficit. Do you agree that it is in the compelling interest of APS beneficiaries that the APS Trustees should commission a full and transparent legal review into the Governance of the APS Trust between 1983 and 2001?
Yes or No.
3. Do you agree that Captain Mike Post, who successfully led the opposition to the APS/NAPS merger in 1999 and who has recently resigned after eleven years as a pensioner-elected trustee of APS, should be appointed as the APS beneficiaries’ representative in any future High Court hearings related to the RPI/CPI and the APS Governance issues?
Yes or No.
It is expected that Capt. Post will be the Representative Beneficiary in any legal action that may take place on CPI/RPI.
6. Captain Cliff Pocock.
On 14th April Capt. Pocock resigned as an APS Trustee in order to act freely as an APS pensioner in the dispute about CPI/RPI. His resignation statement is given below:
Personal Statement
On 14th April 2011, I resigned from the Trustee Board of the Airways Pension Scheme (APS).
Since the Pensions Minister’s Statement on 8th July 2010 that future Pension Increase (Review) Orders would be calculated by reference to the Consumer Price Index (CPI), I have consistently argued that the APS trustees should use their power to amend the Scheme rules and continue to pay pension increases based on the Retail Price Index (RPI). I do so for the following reasons:
1. It is clear that Scheme communications over many years have created a ‘reasonable expectation’ (shared by BA, members and trustees) that pensioners will receive RPI increases. In my view, the trustees have an obligation to fulfil those expectations if it is legally possible to do so.
2. RPI increases are affordable. In June 2010, BA and the trustees agreed a prudent valuation and deficit funding plan which assumed that RPI pension increases would be paid throughout the life of the plan.
3. APS is a well funded scheme. On 31st March 2010 it was funded to 92% on an ongoing basis. Furthermore, the trustees have secured substantial contingent assets which would become payable should BA be unable to fulfil its obligations.
4. The Fund has substantial RPI-linked assets, including a buy-in contract which insures 20% of pensioner liabilities and provides an RPI-linked income stream.
5. It is true that the Fund’s shortfall will be substantially reduced by the move to CPI pension increases. However, under pensions legislation BA is responsible for funding the deficit; it is not the responsibility of Scheme members, least of all those on small pensions.
It is therefore my firm view that the retention of RPI-based pension increases would be in the best financial interests of our beneficiaries. The APS Trustees have the unilateral power of amendment. They can and should take the reasonable and defensible decision to amend the Scheme rules and continue to provide RPI pension increases, seeking the protection of the Court for such action. However, it is clear to me that the Trustee Board is not willing to do so.
This is not the first time that I have been opposed to decisions made by the Trustee Board and in the past I have always been willing to accept the consensus. However, in my view this issue goes to the very heart of trusteeship and I cannot support the Board on this occasion.
Cliff Pocock Former APS Trustee
7. Mr Graham Tomlin.
It has just reached ABAP that Graham Tomlin has resigned as an APS Pensioner Trustee in order to continue to work for the reinstatement of RPI for our pensions.
His letter of resignation to the Pensions Secretary is given below:
Dear Teresa,
Regrettably I feel that I must tender my resignation from the APS Trustee Board with immediate effect.
Like Cliff and Mike before him I believe that it is the duty of the Trustees to serve the interest of the beneficiaries of the APS and ensure that RPI increases are paid this year and into the future.
I feel that APS has become a political football with our beneficiaries paying the price of Governmental interference in the affairs of a private company.
Thirty years as a trades union representative and sixteen as a Local Councillor gave me excellent preparation for losing votes in meetings but never have I felt such a sense righteous indignation as I have recently when coming from trustee meetings.
There are very few people outside of Government and company Boards that see CPI as an appropriate measure of inflation. Just yesterday PWC released their own measure and their Chief Economist had this to say.
Dr Esmond Birnie, chief economist at PwC in Belfast said: “Many people feel that the headline consumer price inflation index fails to reflect the full rate of inflation they face in their regular, everyday purchases.
“Our analysis confirms that this is indeed the case with the ‘everyday inflation’ rate in March being 5.1% as compared to a headline CPI rate of 4.0%.”
Rule 15 allows the trustees to determine that RPI is the appropriate index for uplifting pensions however I am confident in my belief that regardless of how much information it considered it is unlikely that the trustees would reach any other decision than to confirm CPI. In fact I believe that I could predict the exact number of votes that would be cast for and against.
Like Mike I feel increasingly constrained by what I am able to say and do while remaining a trustee and this is particularly true in developing political arguments.
Like Cliff I will not break any confidence, neither will I question the integrity of trustees or advisors I respect all of you too much for that to happen. I have enjoyed working with you and your excellent staff who have served the trustees extremely well over the period that I have been involved with APS.
I do not rule out standing again for election as a trustee especially if I believe that by doing so it can ensure that our beneficiaries receive the pensions that they worked for, paid for and have until now expected to get.
I apologise in advance if our actions cause your staff too much additional work or inconvenience.
Yours sincerely Graham Tomlin
8. Members Meeting under Rule 25. MONDAY 11th JULY ASCOT RACE COURSE.
It is very important that as many as possible be there. Share a car. Hire a bus through your RSA. BA Pensions are sending full details shortly. Put a chair in your boot in case you need it. This meeting has the full co operation of BA Pensions & the help of the APS Trustees. Ostensibly this is for APS members but as NAPS is also afflicted by the change to CPI ABAP sees no reason why NAPS members should be excluded on any other grounds except sheer space available and will press for all BA pensioners to be welcome.
Members are reminded that the NAPS BA appointed Trustees are the same for both Schemes and so will be available to answer questions just as they will for APS.
9. NAPS Widows/ers Annual Pension Increase.
It has been brought to the attention of ABAP that the detail of the pension arrangements given to NAPS Widows/ers specifies that annual increases for the cost of living are according to the RPI. Chairman of Trustees has recently written that these increases are to be CPI, this is wrong.
PLEASE CHECK your own details from BA Pensions (whether APS or NAPS) to see if your increases are governed by RPI in the details sent from BA Pensions when you first received your pension. ABAP recommends that if they are wrong you should at once write to:
Paul Spencer CBE, Chairman of Trustees, BA Pensions, Whitelocke House, 2/4 Lampton Road, Hounslow. Middx. TW3 1HU.
Please contact ABAP if there is still a problem either by email or phone as on your ABAP membership card.
10. The Variable Pension Option.
The last report advised members that the Pensions Ombudsman had confirmed to the ABAP lawyers that they had jurisdiction on the VPO complaint. This was treated as good news.
It has been short lived. The Ombudsman then advised our lawyers that they would not accept the group complaint from VPO pensioners but would give jurisdiction on our single pensioner complaint. This is very difficult as our lawyers were quite clear before this VPO complaint to the Ombudsman started that they accepted group complaints within their remit.
ABAP had validated our complaint with a recent VPO pensioner example. The position at present is that the Ombudsman will give jurisdiction on this recent Pensioner’s VPO complaint. Clearly ABAP finds this less than satisfactory in view of the time & money expended and called for a full explanation from the Ombudsman via our lawyers.
Currently we are advised to await the findings on the single VPO complaint which may well come up with a result that obliges the BA Trustees to take action on the mass of outstanding complaints. ABAP is therefore withholding its questions on the group jurisdiction to the Ombudsman for the moment.
Are there any more Mulberry bushes for VPO pensioners to go around we wonder.
11. Where Are They Now?
It is some time since we tried to find missing members. Perhaps you can help. A list of those who have Dropped Off Our Radar is available here. Please contact Jack Shill if you have any helpful information.
Meanwhile Jack is working with Secretary David Waddington to provide online subs renewals & online joining for new members shortly.
With thanks to All Pensioners for their support in the days ahead.
The Committee of ABAP
17th April 2011.