Re: BA pilots 'prepared to strike'
Arrghh, wrote very long post about pensions, that then disappeared. Gist was:
- There is a big problem with FSP. E.g. when my father started work, he was actuarially expected to live to 58 (pre-independence Nigeria, booze & malaria cut short most expats). He is now in his 70's. This is no-ones fault, apart from maybe Fleming and his penicillin
- At least BA is about 80% covered by funds, govt pensions are 0% covered
- You have about 40-45 years working life to save (either forced saving by taxes and pensions, or yourself) enough to last you 20-30 years. Savings ratio in UK is very low - we are all guilty of short-termism, of preferring a new car now, rather than not worrying about heating bills when you are 85
- In hindsight, companies should never have offered FSP - it is such a huge gamble on what the world will be like in 30-50 years time. (intererestingly, actuarial calculations on survivor pensions rates are now getting skewed by second marriages. With viagra and cheap air travel, some people's pensions will be still be paying out 50 years after they retire...)
- Not just a UK problem, worldwide. But UK is more transparent about it. Ford & GM are in deep doo doo. We all know about UA.
For BA - in their shoes I would take the 1.4bn hit and start again. May mean that B744 will have to fly until they are 25 years old, not 20, but big deal.
Not time to go into an accounting explanation, but profits are not cash flow.
In a way, my father was lucky. The pension plan went tits up in his thirties, and he still had enough time to make other savings. Must be awful in be in your 50's, responsibilities to children, mortgages etc., and then have this sprung on you.
I have a DC plan. In many ways safer than a DB plan, as more and more are unfortunately finding out.
This isn't new, it has been known for a long time - which is why for the last generation or so any company starting up uses DC, not DB (e,g, South West), and why Thatcher linked state pension to inflation, not earnings, 20 years ago.