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Old 8th Dec 2001, 14:54
  #50 (permalink)  
OrangeAdair
 
Join Date: Dec 2001
Location: SE a/p
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In response to Undercover's points:

1. In the past, the scheme has done exceptionally well (out performing the market and most other schemes). This has generated a past service surplus (and in the past a real surplus when future liabilities are taken into account - it is a gross deficit now). However, even after taking into account return on investments, NATS should currently be contributing at around 30%. The past service surplus has always been used to offset the employers contributions and brought them down to a reduced SUSTAINABLE level (eg. 12.5%). If the only source of income for the scheme was from contributions, the contribution rate would be much, much higher than 30%.

2. Don’t rely on the trust of promise under these circumstances. There is a loophole! If in 3 years time NATS say they cannot afford to pay the new rate of 30% (which will be the case when the past service surplus runs out), the scheme becomes unviable. The trustees will then be legally obliged to close the scheme. The legislation, that was meant to protect our pension scheme, which was passed with PPP, will not apply (because it was not NATS who closed the scheme) and NATS will NOT have to offer an equivalent scheme. In all probability, they will offer a money purchase scheme, which will be much cheaper for them and provide the employees with much reduced benefits.

None of the above is mentioned in the highly spun documents coming out of NATS (eg this week's Update) or the TUs. No one is setting out the criteria for when NATS will recommence contributions - don't you wonder why? Phrases such as 'when the actuary recommends' are meaningless. He can only tell them the effects of various scenarios that are put to him - such as how long can we not contribute for (ans: until the money runs out).

Given that its going/gone through, all we can do is watch them like hawks at each actuarial update and continue trying to dispel the management/TU spin and disseminate the real facts to as many people as possible (there are a lot of unconcerned people out there who do not realise the serious implications to their pensions).
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