BA next after Barclays and Morrisons?

[Fly747]

It looks like the BA Final Salary Scheme doesn't have long to live.
British Airways won't rule out pension closure - Telegraph (http://www.telegraph.co.uk/finance/newsbysector/transport/5446391/British-Airways-wont-rule-out-pension-closure.html)
BA are "spunking money up the wall" as they say on the Apprentice!
Or a "pension with wings" as MOL would say.
BA pilots will have to accept its closure if they want to keep flying.

[Hotel Mode]

I found out about it when I pitched up at Meadowbank

What sort of muppet turns up for an interview not knowing what they're applying for?

BTW Meadowbank is a caravan park in Bournemouth, I hope you enjoyed your holiday.

[Right Way Up]

....and there I was thinking Meadowbank was the old BA recruiting office. Must have dreamt it!

I do remember that very strange recruiting lady!!

[Metro man]

As final salary schemes seem to be unaffordable, does this mean the government will do away with them for civil servants as well ?:E

[qwertyuiop]

Midnight cruiser highlights why the economic future for pilots is dire. There is no desire to pull his/her conditions up to where they were and should be, simply envy and a desire to see others brought down.

[Nicolaus Silver]

Final Salary plans cost the employer between 18% and 25% of the employees salary. Corporations invest to make enough money over your working life to fund 27 years paying max 66% of your final salary maybe, if you're lucky, with 5% pa escalation.

The govt does not invest over time for staff pensions, it just pays them willy nilly out of current revenue.

[Carnage Matey!]

It'll be interesting to see if Midnight Cruiser wants the "final salary fat cats" to subsidise him when it comes to compulsory redundancies. I'm sure he'll be squealing for everyone else to take some unpaid leave so he can keep his job flying with the fat cats he detests! Maybe I'll pass on that UL, can't spare the money with all that Ferrari polish to buy.:ok:

Perhaps all that time off will give him time to ponder how the BACC might realistically have acquired the unique right for new pilots to join a scheme that was closed to every other BA employee.

[Monty77]

What sort of muppet selfishly doesn't attempt to protect the right of new joiners to share the benefits you expect to enjoy?

You.

The 'I'm alright jack' attitude will reap what it sows, and your failure to defend T's&Cs for the newbies will bite you. They'll outnumber you before long and management will have divided and ruled.

Don't expect sympathy from the money purchase guys. You pulled up the drawbridge and sold them down the river.

Enjoy a smaller pension than you expected.

[Carnage Matey!]

Take a reality check Monty and then come and join us in the real world. The scheme was over a billion pounds in deficit at the last valuation. Read that again. Over a billion pounds. It'll be three times that this time. IT DOES NOT WORK. THERE IS NO MONEY TO PAY FOR THE PENSIONS ANYMORE. Against that backdrop you think pilots, and pilots alone, can force BA to keep open a scheme which is now nothing more than a gaping hole in the balance sheet that will never be adequately funded. What planet do you people live on?

[Monty77]

Carnage Matey:

You don't come across well.

Not only are you gloating about your (now dodgy) pension and ferrari polish, you now insinuate that last in first out will get rid of all those nasty envious poor people who happened to join the company a bit later than you, doing the same job for a worse deal.

[Monty77]

'You people'

There you go again.

Like you say, at some point the maths won't work, and a guy who is 45 now will be told he (or she, obviously) will not get the pension he expected. About 10 years from now I reckon, when those already in receipt of a pension are protected by law, and the fund cannot pay for those who are about to retire because all the old fellas aren't doing the decent thing and keeling over 2 years after retirement.

Bankruptcy? Company reformed using the LHR slots? Who knows. Only one thing is certain, and that's Govt pensions because today's taxpayers fork out.

I really don't want a p1ssing competition about this and good luck to you all, regardless of where you are. We all know which things in life are certain, and pensions (non-Govt) are not one of them.

Cheers

[OrryFace]

Ah yes, but the great thing about 'pulling up the drawbridge' is that you then can't get out to pay the moat cleaner :)

On a more serious note, if the whole thing goes belly up, then what happens? The government compensation thingy only pays a maximum of 28k.

[Carnage Matey!]

My pension is going to be the square root of sweet FA when the fund is wound up in the next 24 months, as it surely will be. Hardly something to gloat about, however I won't be bitching and moaning about how unfair it is or how hard done by I was. Nor will I blithely saying "If only the BACC had done it differently they'd have magicked the economic gloom away". Too many posters on this thread clearly have little understanding of the economic realities of the past 10 years regarding pensions. Having re-read this thread I actually don't think MC even works for BA as they tend to employ people with a bit more commercial nous.

Oh and by the way, apart from the pension, those doing the same job for a worse deal than me are doing it for better money than I ever got thanks to the front loading of all recent pay and pension deals to improve their lot.

[Re-Heat]

The fund will surely be closed to current employees as well in the near future. CM - I can understand your view - you were between a rock and a hard place in accepting the present arragements for new employees. I don't think is was a pleasant place to be, and it is besides water under the bridge.

My key objection to the closure of DB schemes is the extraordinarily bad deal that private employees (who actually generate the wealth in the country) get in comparison to those in the public sectors - a vast group whom we are directly funding, who in some cases have no fund behind their promised pensions, but are paid from current taxation.

Given the advantages in moving between employers with DC schemes, I would not advocate a return to fairy-tale DB schemes, but a complete and total termination of all DB schemes, particularly public sector promises that are unfunded, and retrospective awards by company CEOs to themselves.

The reality in a world of low interest rates, ridiculous actuarial calculations and other-wordly accounting regulators is the strangulation of British enterprise to the point of suffocation.

No wonder BA is referred to as a pension scheme with an airline attached.

[JW411]

Happiness is being retired on a fully-funded final salary scheme (which, luckily, has nothing whatsoever to do with BA).

When the bubble bursts, it is not going to be pretty.

[911slf]

At last something within my area of expertise! At present, civil servants who joined before July 2008 do get final-salary based pension (at 60). Those who join after that date get pension based on average career earnings (at 65), and have to make a (modest) contribution toward it. There is political discussion regarding making the civil service pension in future a defined contribution scheme. There is, so far, no discussion of retrospectively reducing the value of pensions in payment, or rights already accrued - so far as I know not in either public or private sector employment. If a pension company fails (Equitable Life) this can happen. At present it is unclear if the Government will have to pick up the slack in such a case.

Whatever the rights and wrongs of all this may be, if pensions to existing retired civil servants were to be reduced, this would be seen as the Treasury defaulting on its obligations, with all that would imply for the ability of the Government to raise money through bond issues.

[Metro man]

Of course the BA pension scheme can't fail, it's too big. :hmm:

Anyone see another General Motors in the making ?

Remember what happened with the United Airlines Pilots pensions ?

Unfortunately we are looking into a black hole of underfunding where retirements are concerned, not just for pilots. How does the government expect to meet it's committments let alone step in to make up the short fall for everyone else ?

Gordon Browns rape of private pensions a few years ago bought him some short term relief at great cost to those affected, but the cupboard is getting rather bare. Massive committments have been made far in excess of the ability to pay them and the chickens will come home to roost.

The present system is unsustainable. Prehaps individual pension pots for everyone is the answer. Singapores Central Provident Fund would be a good model to base things on CPF Board - Members - Home - my CPF 2 (http://mycpf.cpf.gov.sg/Members/home.htm).

Employer and employee contribute a set amount to a persons account, a guaranteed interest rate is paid on money left in the account, or it can be used to purchase approved investments, even a house. If you want a bigger pension, you contribute more money. What you've got for retirement is what's in your account. There are no unfunded liabilities because no one is entitled to a final percentage of their salary index linked to inflation. There is no burden on future generations to fund other peoples retirements, just a very strong incentive to take care of your own.

The money accumulated in the fund is invested to pay the interest.

The only thing you can guarantee regarding pensions in Britain is that the politicians ones will be protected.

Whatever the rights and wrongs of all this may be, if pensions to existing retired civil servants were to be reduced, this would be seen as the Treasury defaulting on its obligations, with all that would imply for the ability of the Government to raise money through bond issues.

Easy way around this is to pay the pensions as promised, and then subject them to a special tax. A way was found to rob the private sector pension schemes, the public sector should bear their fair share of the pain.

[wobble2plank]

Sadly I agree that BA will have to get rid of the pensions millstone around its corporate neck! Whilst I don't truly believe it has been mismanaged I do truly believe that the opportunistic 'end to boom and bust' Gordo Brown has a role in the collapse of all private pension schemes.

His taxation rape of private funds protected by the previous Government has funded his extravagant squandering of cash under Labours burgeoning Civil Service. The £100 Billion, yep, £100 Billion that he has used to prop up our ailing social state and Senior Civil Service golden parachutes, pensions and well covers.

So, once again, those of us who have contributed in good faith to ensure our retirements have been shafted by a Government that, hopefully, won't exist in a few weeks. That is along with the companies, Barclays, Morrisons and BA who have seen their subsequent per employee contributions sky rocket.

In this case I seriously think, although I also stand to be shafted, the company has little choice in the matter.

[911slf]

It is indeed possible to cut public sector pensions in payment. The paper referenced describes such instances. I am not sure it would make anyone feel better about their own prospects in either the public or private sectors but it makes interesting reading.


The World Bank and the Attack on Pensions in the Global South (http://www.globalpolicy.org/component/content/article/209/43228.html)

[Dick Deadeye]

You pulled up the drawbridge and sold them down the river.


One of the most ignorant comments ever made on this forum! :ugh:

Do you ever think that BA might just have been the ones who did that?

You don't come across well.


Pot. Black. Kettle.

I suggest you take a good look at how your posts read, although a little bitterness in a failed BA applicant is often to be expected.

For those who want a sensible discussion about how and why various groups of BA pilots ended up on different pension schemes, something that no pilot in BA wanted or sought, please start by providing a realistic and achievable answer to the question asked by Carnage Matey!

Ponder how the BACC might realistically have acquired the unique right for new pilots to join a scheme that was closed to every other BA employee.

The rest of you can continue to spout your usual rubbish.

[demomonkey]

I don't just think it is failed applicants who feel like that and I think it is a little arrogant for you to assume that anyone who disagrees with you (or Carnage Matey) is someone to be insulted. That kind of behaviour is unprofessional, adds nothing to the debate and will only get the rest of us a bad name.

[bluepilot]

Using the failed applicant chant is showing extreme arrogance and showing that you really do think you are superior. I know some excellent pilots who "failed" the selection process, equally i know some right knobs who passed! and vice versa.

Its a shame that this government have trully screwed this country, particularly when it comes to pensions. Unfortunately the writing is on the wall for NAPS and the personal cost to all those involved at BA is unacceptable but inevitable. Probable best to accept it and make solid plans now rather than to fight a loosing battle and put the company's future at risk.

[Propellerhead]

In some ways it's better to be the 1st on a new pension scheme than last on an old one! If you had joined on the FS pension there is no way you would have got the promised reward.

However, the old pension scheme is now doomed and in some ways I think it will be better for unity if everyone is on the new scheme from now on. Unfortunately, any change in the old scheme will mean people at the top having to stay for longer to build up their pension, thus increasing stagnation. Either way it's bad news.

[Monty77]

Dead Eye : pleased to meet you too!

Thanks for the valuable vote on the most ignorant thing ever said on pprune. I shall donate the money to a charity for ignorant pilots.

This was discussed a few years ago and some of the NAPs people were extremely defensive of their pensions. Nothing wrong with that.

Some of the more aggressive posters held the view that they would not budge an inch and would go on strike even if it meant the company folded. Now that is a little extreme.

To a greater or lesser extent we are all motivated by self-interest.

So I can understand a 20 year BA Captain not being too concerned about the retirement plans of a 23 year old First Officer. Just as the First Officer is not going to go on strike for the former and more than likely attempt to break any strike action to secure his future.

Divided and ruled.

By the way I passed BA selection after 16 years in the military just before Sep 11. Doh! Still regard them as arguably the best airline in the UK but have elected to loaf about in the tax-free sun for the foreseeable future and be home every night with a glass of wine (Location, location, location). A colleague of mine was a month ahead of me in the recruitment pipeline and had signed his contract, which, to their credit, BA honoured. I wouldn't swap with him now, which just goes to show life is what actually happens to you while you are busy making plans.:ok:

[Desk-pilot]

Strikes me that part of the problem is the appalling mismanagement of pension finds by the City. I can't believe that any of these funds are in potential deficit when the past twenty years has seen record returns for anyone wise enough to invest in the right things - property for one thing.

Just what were the overpaid charlatans of the financial institutions doing while property was soaring in value.

Perhaps their mismanagement and absurdly high levels of self-reward are at least partially to blame for the crises affecting so many schemes such as BA.

I am now a member of a defined benefit scheme although am also a previous member of both the BA NAPS and Royal Insurance schemes both of which were financial salary and are now in deficit.

Does anyone know what is likely to be the impact on these schemes going forward if the above happens?

Desk-pilot

[Re-Heat]

Desk-pilot:

Pension investment management is nowhere near as straightforward as you assume. For a start, the fund is not only trying to find investment returns, but has obligations to pay out to those who are current pensioners. If fully invested in property, you would find yourself with illiquid investments in property funds, and be totally unable to pay the obligations to your present pensioners.

I do not know how you come to the conclusion that the deficit is solely the result of the investment performance. Granted, there are some good and some bad managers in which the fund will be invested, but for a fund the size of NAPS, it is wholly unrealistic to expect that the fund can be entirely invested in the best managers (as their fund sizes are capped, and good managers are often only shown to be so after the event). Furthermore, the deficit arises not only through investment performance, but also through the present valuation of the liabilities, and hence changing age assumptions and discount rates of gilts have huge effects on the valuations.

It is wholly foolish to invest a fund the size of NAPS in property to any greater degree than around 10% (including all other alternative assets). Productive investments in companies are far better investments that depend not only on the sale of the asset, but generate significant operating returns in the interim (something that property assets often fail to achive through rentals).

This thread is not a discourse on investment strategy, but comment is required to rectify misconceptions.


I would also hesitate to speculate as to the impact of whatever BA plan, since there are many options and alternatives, depending upon the involvement of the regulator and the legal structure of the fund.

[Fly747]

Fears of strike action as BA tells cabin crew 2,000 jobs must go - Times Online (http://business.timesonline.co.uk/tol/business/industry_sectors/transport/article6458982.ece)
I guess a strike would finish it, airline and all. I hope they are not that stupid.

[LIMA OR ALPHA JUNK]

When the pension deficit is bigger than the market capitalisation of the company, something will have to give.

It is probably only a matter of time before all DB schemes are shut down in the UK. Sad sign of the times.

[rodthesod]

JW411


Happiness is being retired on a fully-funded final salary scheme (which, luckily, has nothing whatsoever to do with BA).



Especially when you can enjoy it in a sun-drenched paradise TAX-FREE - a privilege not open to those with 'government' pensions.

[Metro man]

It is probably only a matter of time before all DB schemes are shut down in the UK. Sad sign of the times.

Except for politicians, judges, senior civil servants etc. These guys WILL find a way to look after number 1.:hmm:

[theflyingbishop]

Sadly, all final salary pensions will give way eventually. They were designed when people retired with an average life expectancy of around 10 years, now the life expectancy is near 20 after retirement if not more, and with pilots retiring younger than most, I am surprised it has lasted this long at BA... The only safe way to have a good pension is to ensure you provide for yourself, and take any government/company pensions as a bonus, because they could go under at any point!

[Sir George Cayley]

Just remind me guys, the money I'm putting into my FSPS is my money? So, is there not a contrct between employee and capilist b'staard, sorry employer to look after my earnings and return same in the condition in which (at least) they found them? I waas 'invited to join after a 1 year probationary period but at the time it did not feel right to say no.

I know I'll be the poorer for that but perhaps one benefit of this discussion could be to warn those below us seniority wise of the diminishing prospects a company pension offers. Especially as some 20 year olds could easil live to be 120.

Sir George Cayley (120? Did that 2 centuries ago)

[Metro man]

If your contributions and your employers don't make enough money to pay the percentage of your final salary that you want, who exactly is supposed to step in and make up the shortfall for you ?

[Fil]

Some here forget that the short term costs associated with winding up a FSS is greater than keeping it going. I guess for BA the best would be an extension from the Pensions Regulator to the period allowed to fund it, or maybe a pension holiday. The worst option for the pension fund would be the company going bust so allowing flexibility in payments to help BA through this downturn could long term benefit the fund. Once (maybe IF) fully funded though it would be VERY vulnerable.