Thanks to the relaxation of Covid restrictions earlier in 2021, we were able to hold our first AGM since October 2019 on 28th October 2021 At Magna Carta School, Egham, Surrey. Our Chairman, Mark Fielder, opened the meeting at 11.00 promptly and spoke for a few minutes on ABAP pension matters, recapping some of the formal Chairman’s report to the AGM circulated previously (published below).
Here is the content of the Chairman’s address to the AGM
“Welcome to our 2021 AGM. The last one was held here two years ago and what a couple of years it’s been. Thank you all for coming and thanks also to those who cannot be here but have sent their proxy votes in. It’s great to see such a strong commitment to ABAP.
At our last AGM we were able to recognise the work of two stalwart members of ABAP, Mike Post and Jack Shill with a presentation. I’m glad we did because I’m sad to report that Jack died earlier this year.
This time 2 years ago we were looking forward to the APS settlement being blessed by the high court, with a hearing scheduled for December 2019. I think it’s fair to say that all concerned were looking forward to this with a great sense of relief that 6 years of legal action would finally be over.
From our perspective, we were engaged in the transfer of data from Asendia to Credit Union Solutions. Asendia gave us a rather short notice of termination but fortunately we had an alternative ready. What we hadn’t bargained for was the way that data was to be handed over. We were simply given spreadsheets containing member data as the person who was the expert on the system was no longer available. This created a lot of work for Dave Gunner and myself.
As well as this, our long-serving secretary David Waddington handed in his resignation at the AGM, leaving me to fill the gap on what I’d hope would be a temporary basis. Losing the services of Asendia and David left quite a gap in what we were able to do and it’s taken a while to recover, which I believe we are now doing.
All this pales by comparison with what awaited us just a few short weeks later in 2020. Many of us have had long careers at BA and its predecessors so we’ll have seen many ups and downs of the industry, but the Covid pandemic has really driven a coach and horses through our industry. Now there are signs of recovery but it feels quite fragile at the moment.
Despite the state of the airline industry, our pension schemes are holding up well, I believe.
APS is in the fortunate position of not requiring support from BA, except for employer contributions for the few remaining active members – yes there are still some! – and of course the commitment to support the discretionary increase regime. NAPS still has a significant deficit but funding levels have improved. BA has been forced to suspend deficit recovery payments for the past year but this has been backed up by assigning property assets across to the scheme, basically the East Base. On a positive note, investments have been performing well.
Both schemes have been undertaking extensive de-risking and matching investments to liabilities. Our schemes have skilful fund managers and the move of BA Pensions investment arm to Blackrock is a positive move. Sadly it was totally misreported in the popular press who gave the impression that BA was outsourcing its entire pension business.
I strongly recommend you read the recently published Trustee reports and financial statements to get the full picture of the schemes. I would like to commend the Trustee boards of both APS and NAPS who do an excellent job of managing our schemes. Being a Trustee director isn’t an easy role, it’s a very responsible position and we’ve been fortunate to have some really good people in place. It’s also been good to see more people standing as candidates in trustee elections and we’ve supported these elections too.
Something which I’m particularly pleased about is that ABAP now has a much improved relationship with BA Pensions. We are recognised as the only organised independent group that represents BA pension scheme members.
One landmark achievement has been the redevelopment of our website and email system. This gives us a way to rapidly communicate to members. Now we have a replacement mailing facility, we will not neglect our members who prefer paper communications by post. We’ll also soon have smart new membership cards.
Much to my relief, we also have some new committee members, which we’ll come to later on in the formal business. There’s always a need for fresh faces on the committee and it’s important that we have a succession plan in place, just as the Trustee boards need new people willing to stand. That’s enough from me, let’s move on to the formal business of the AGM. We’ll do that, then have a short comfort break, followed by a Q&A discussion session.”
The formal resolutions were each voted on in turn and each one was passed either unanimously or with a substantial majority.
Resolution 1 outcome – 2019/2020 audited accounts accepted as presented.
Resolution 2 outcome – The APAP Constitution was amended as proposed and signed by the Chairman.
Resolution 3 outcome – Subscription levels for 2021-2022 and 2022-2023 to remain the same.
Resolution 4 outcome – The committee members proposed were elected unopposed:
- Mark Fielder (Chairman)
- Graham Tomlin (Treasurer)
- Dave Gunner
- Ray Smith
- Joel Kosminsky
- Tom Mitchell
- Bruce Wilmot – previously co-opted
- Peter Saxton – previously co-opted
- Debbie Payne – previously co-opted
- Simon Green – previously co-opted
The meeting then broke for a few minutes and resumed at 12:30 for a mix of any other business and questions from the floor. The discussions were aided by the welcome presence of several Trustee Member Nominated Directors from both APS & NAPS.
A number of questions were raised:-
AOB 1 – Joel Kosminsky asked the meeting if there were any ex-Concorde cabin crew as he would like to meet to ask them some questions after the meeting.
AOB 2 – Joel Kosminsky asked if any Member knew of the BOAC sports ground on the south side of Gatwick. Again, he would like to meet to ask them some questions after the meeting.
AOB 3 – Joel Kosminsky informed Members of a potential Government investigation into defined benefit schemes and advised that Members stay alert for accurate information which might affect APS & NAPS.
AOB 4 – The Chairman asked for stories of Members about their time at BA that could be published on the ABAP web site.
AOB 5 – Discussion centred on the Government’s change from RPI to CPIH by 2030 and the impact that would make on many pension schemes. Members were asked to raise their concerns with their MPs.
AOB 6 – Trustee Member Nominated Directors (MND) present were asked if APS pensioners would receive the full RPI increase next year. This would not be finalised until the February meeting of the Trustees however there is an expectation that this maybe the case, based on the Discretionary Increase regime. (NAPS increases are CPI)
AOB 7 – A question on what ABAP’s policy is on what they might do if one of the BA pension schemes had a surplus? It was made clear that ABAP would probably not be able to succeed in trying to influence BA to increase benefits and therefore would not have a policy. It was explained by a Trustee MND that the Trustee would prioritise the use of a surplus to secure and de-risk existing benefits. The Chairman pointed out the relevance of this approach to the report to the AGM on the matter of VPO/Level Pension (below)
AOB 8 – A vote of thanks was proposed from the floor for the work done by the Committee and unanimously supported by all Members present.
AOB 9 – A question about the number of widowed partners (correct term is “dependent pensioners”) who are ABAP members and are still receiving a BA pension was asked and the Chairman said he would make enquiries.
AOB 10 – A Member asked the Trustees if they could find out what the Pension funds were invested in with regard to environmentally sustainable investments. Trustee MNDs informed members that the legal requirement to disclose investments is increasing and BA Pensions will have to abide by this legislation.
The Chair reminded Members that the Association could not provide financial advice in any way as they are not registered or regulated to do so and have no intention of getting involved in this area.
The Chair took the opportunity to thank Members for their attendance at this time and suggested that if possible the next AGM will be held in the same location and would include refreshments along with also being made available live by video stream to Members unable to attend.
The AGM was closed at 13:15
Chairman’s Report to 2021 AGM
It has certainly been a couple of eventful years since we last met in October 2019. At that AGM, we made presentations to Mike Post and Jack Shill, recognizing their service to ABAP. I am so pleased that we did because on 13th January this year, Jack passed away in Frimley Park Hospital after a period of illness. Jack and his wife Sylvia did much to keep the Association running in its formative years.
At the AGM and shortly afterwards we found ourselves presented with two difficulties. First our secretary David Waddington resigned and second, Asendia, the data management company we were using at the time ceased to provide us with any services with effect from 31st October 2019. We were quite unprepared for David stepping down and this left us with a large gap in the management of ABAP from then until quite recently. We had prepared for the transfer of data from Asendia to our new provider, Credit Union Solutions but losing Asendia also lost us our mailing and membership card facilities, as they declined to continue these after shutting down the database.
At the same time, your chairman was preparing for the forthcoming High Court hearing to approve the settlement reached between BA and the APS Trustee regarding the matter of discretionary increases. The settlement was approved in December 2019 which enabled APS members to benefit from the current discretionary increase regime which effectively restores RPI equivalent rises.
Attention then turned to sorting out the membership data which Asendia had handed over to us. Dave Gunner & I found that we had been presented with spreadsheets containing many errors and duplicated entries. Sorting this out took quite a lot of work in the early weeks of 2020. Having sorted out a reasonably accurate membership list from the mess which we had been left, we found ourselves in lockdown, with many printing and mailing companies shut down. Fortunately, we were able to create an email list of some 1500 or so names which enabled us to keep in touch with a good percentage of our members. To my regret, we were unable to reach those who were serviced by post. This meant that for a time ABAP became an online organization. On a positive note, we were able to complete the intended redesign of our website with a much improved design and importantly, one that’s easy to maintain and update. This was completed in time for the 2020/2021 renewals.
We were unable to hold the 2020 AGM due to Covid restrictions. Alternatives were considered but attempting to hold the AGM via online video conference was thought to be unsatisfactory.
Since the APS Settlement, ABAP has enjoyed a much improved relationship with BA Pensions. We have been asked to provide our views on the APS Trustee Board reorganization, we have supported APS & NAPS Member Nominated Director elections and your chairman meets regularly with the CEO and senior officers of BA Pensions. BA Pensions recognizes ABAP as the only organized voice of the scheme members and we feature in their publications to members. It’s because of this improved relationship and the need to support BA staff with their pension issues that your committee gave a great deal of thought to how ABAP can be organized going forwards. Your committee did give some consideration whether ABAP could continue to function, given a dwindling number of members willing to help run the Association. The difficulty in attracting anyone to take on the role of secretary has led us to investigate the possibility of employing a professional organization to perform this function on a paid contractual basis. To this end, we are now working with Not for Profit Business Services for a three month period as a trial.
Fortunately, the recent appeal for new committee members has resulted in four new committee members – Debbie Payne, Bruce Wilmot, Peter Saxton and Simon Green. Two longstanding members, Joe Lowes and Bob Acott decided to step down. I thank them for their service and welcome our new joiners. We still need more people ready to serve as no one person on the committee should be regarded as indispensable, your chairman included. Each named officer should have an understudy in waiting. It was because of this period of reorganization that we decided to defer renewals until the end of October 2021, so we could be certain of having an organization that can support the number of members to which we, as a pensioner organization, should aspire. I am pleased to say that the outlook looks much more positive. I am optimistic that we can now move into a more professional management of the Association and build our membership back up into mid to high four-figures. It’s very hard to predict what the future might hold for our pension schemes. The pandemic has run riot through our industry and recovery will take some considerable time. There may yet be some fundamental changes to airlines so it’s vital that ABAP remains on watch and alert, working to ensure that everyone with a BA pension gets that to which they are entitled.
Mark Fielder, Chairman
Report back to ABAP Membership on VPO/Level Pension
At our AGM in October 2019, your committee was asked to look again at this issue, the matter having gone quiet for a while. The feeling from the floor being that as the litigation regarding discretionary increases having been settled, the time was right for another approach to the Trustee. As chairman, I took this upon myself to action and it has taken some time since the AGM. The reason being is that our secretary also stood down at the AGM and I have been undertaking both roles since then.
I am informed by BA Pensions that there are in the region of 950 members in APS and 450 members in NAPS with level pensions.
Restoring level pensions to the standard form by ending post-state pension age reduction will cost both APS & NAPS considerable sums. Leaving aside all other considerations which I will come to in due course, this requires a disposable surplus to be declared by the actuary. A disposable surplus is one that provides an excess of funds over and above all existing and foreseeable liabilities. Bluntly, with the current deficit, NAPS has no prospect of a surplus for the foreseeable future. APS has declared varying surpluses in 2018 (£599m), 2019 (£881m) and 2020 (£387m) but these are not actuarial disposable surpluses within the meaning of the term. On the basis of current and predicted liabilities, APS actually shows a small deficit. I refer members to the yearly funding statements published by BA Pensions for each scheme.
Both schemes are undergoing their 3-yearly actuarial valuations at the present time, the results of which will give an accurate picture of each schemes funding position. For APS, the discretionary increase (DI) regime has priority over other calls on any surplus funds. These increases benefit all scheme members and will continue to do so until at least 2030. In summary of the funding situation, there are no funds available for removing the level pension reduction, which has been suggested to me by some members as what they feel would be an acceptable solution. In addition to affordability, any change to level pension will be considered a pension enhancement. This would require the blessing of British Airways. I need hardly remind members of the current situation of the entire airline industry and our former employer. BA has negotiated a 12-month deferral of deficit recovery payments for NAPS. While APS is in the fortunate position of not requiring payments from BA (with the exception of employer contributions for the few remaining active members), I can say with reasonable certainty that BA will not look favourably on a request that the pensions of a relatively small group of members be enhanced.
Now I come to a more difficult message to give. Understandably, those who have opted for level pensions now feel that they have more than paid back any benefit gained by their choice. The ABAP committee, myself and the Trustee directors with whom I’ve discussed the matter have great sympathy with these feelings. However, the stark reality is that the choice made is irreversible and this was made clear in the documentation at the time. The explanatory pamphlet published at the time said:
“The level pension arrangement aims to give you a more even pension throughout retirement, so you can choose to have an additional amount paid by the Scheme until State Pension Age and a lower pension afterwards. This additional amount stops at State Pension Age and it is your normal pension which is then reduced. It is very important to note that the reduction in pension from State Pension Age continues
for the rest of your lifetime.
Once a level pension has begun it cannot be altered or cancelled under any circumstances. The arrangement has no direct connection with the DSS and does not affect your State retirement pension in any way”
Frequently, a level pension is referred to as being an advance or a loan, with the assumption that it’s to be paid back and once that’s done, pensions ought to no longer be reduced. As the extract from the pamphlet shows, that’s not the case. Understandably, level pension members have strong feelings of injustice, unfairness and that BA Pensions are profiting at their expense. There is a detailed Pensions Ombudsman Determination (78488/2) in relation to an APS pensioner in 2012, where the Ombudsman found that the VPO option was made clear to the member in question and did not uphold the complaint. The Ombudsman considered if there had been an injustice and decided there had not. He also makes the point that level pension is not a cost neutral option and there will be winners and losers. While this determination specifically applied to the member making the complaint, it’s very likely that the Ombudsman would reach similar conclusions to other complaints made on the same basis.
Nobody should be critical of the decisions reached by those who opted to have a VPO/level pension. They took a decision that was right for them at that point in time. The passage of time and increasing life expectancy has unpicked those decisions. Having spent some considerable time looking at this, my conclusion is that any alteration to level pensions is going to be unlikely in the short to medium term. The door is not entirely closed as the APS Trustee has indicated that should a disposable surplus above RPI arise, the cases of level pension members and others will be considered. I cannot envisage any possible solution for NAPS members within the same timeframe due to the size of the current deficit and the greater liabilities of a scheme three times the size of APS.
Bearing in mind my experience as Representative Beneficiary in the APS DI litigation, I would be very reluctant to put ABAP in a position where it is in direct conflict with both the Trustee and British Airways. To this end, my recommendation is that ABAP should suspend any campaigning on level pension until such time as there is sight of a funding position that would permit the Trustee to consider taking action.
Mark Fielder, Chairman