I've been going a lot of digging about the NAPS deficit and uncovered a couple of interesting points.
1) When looking at the deficit BA are claiming it has risen from £928mil at the 2003 actuarial valuation, to an estimated £1.4bn now.
In fact the £1.4bn is using FRS17 accounting rules of pension for pension liabilities and uses a gilts/bonds based rate of assumed growth of assets. If you apply the same FRS17 rules to the 2003 valuation, the deficit in 2003 was £1.6bn.
i.e using FRS17 for measuring the deficit in 2003 and today, shows the situation has improved by approx £200mil, rather than deteriorated further as BA are trying to portray.
2) The actuaries valuation in 2003 (the purpose of which is to set the company [BA] contribution rate for the next 3 years 2004-2006) was carried out by Watson Wyatt, who at the same time were also carrying out the APS valuation. At the APS valuation it was decided that updated mortality data should be used to reflect the fact on average we are living longer. They therefore used 1992 data rather than 1980 data which had been used at previous valuations in both APS and NAPS.
** The NAPS valuation continued to use outdated 1980 mortality data in the 2003 valuation**
This would have reduced the liabilities of NAPS and reduced the declared deficit and the amount BA should have been paying in for the 2004-2006 period. (Yes they were paying in lots extra, but it should have been even more if the had used 1992 mortality data - as APS were using)
It is illogical that NAPS with its younger member age profile than APS was using more pessimistic life expectancy data than APS, and it was the same people doing both valuations at the same time !!
So despite NAPS using out of date data and therefore one could argue, BA were underpaying slightly, the deficit has in fact reduced.
I find this very telling fo why BA are so desperate to keep this quiet.
By the way, this info has come via 2 research papers published by RBC Capital Markets Open Forum Notes 3 and 21, by John Ralfe,an independent pensions consultant and consultant to the UK Accounting Standards Board on FRS17.
Tim Byatt