NATS PENSION - IN DANGER?!
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I am concerned that a lot of people may have been reassured by the statement and very defensive/accusational/misleading background paper that the union put out on this issue. Very few are aware of the facts and the very serious threat that our pension is now under. I have therefore put together the following in the hope that it will be disseminated throughout NATS. Please encourage people to read it and, more importantly, encourage them to make their views known to the TUs and management. I think I shall be resigning from IPMS this week - after all, if they won't make a stance against this, what will they fight for - they're certainly not representing me at the moment! It's all very suspicious if you ask me.
The changes that have recently been agreed between NATS and the Trade Unions may be the beginning of the end for the NATS section of the CAA Pension Scheme. Although pensions may not be very interesting, please take the time to read and understand the following about the changes. It is important. Please make your views known on the matter to both the TUs and management. Also educate as many of your colleagues as you can.
NATS staff currently contribute 6% of their gross salary to the pension scheme. When the Airline Group took over, NATS also contributed 12.5% of your gross salary into the scheme.
When the pension scheme was split (between NATS & CAA) a valuation of the fund was performed up to 31/3/01. This showed a past service surplus of £584.3m in the NATS section; this is what is left after the pensions for the years worked so far have been allowed for. It does not take into account future years that will be worked. When the future years (future liabilities) are taken into account, there is a deficit in the scheme, not a surplus - this is the first time this has been the case.
When future liabilities are taken into account, NATS should currently be contributing at 30% (at the date of the last valuation - 31/3/01). However, the past service surplus is used to offset some of their contributions and by doing this they could contribute 12.5% indefinitely, without detriment to the scheme.
NATS asked the scheme’s Actuary to assess the effects of reducing their contribution rate to 10.8%, This could be done, but it would use up the surplus in about 16 years. They would then have to contribute at around 30% to maintain the scheme.
The latest agreement allows them to stop contributing completely (this was not recommended by the scheme's actuary, as the TU circular suggests). The past service surplus (that has been accumulated over many years) will now be completely used up in about 3 or 4 years. NATS will then have to contribute at 30+% to maintain the scheme. The unions have signed up to this without consulting the members.
This is important, because if in 3 years time NATS say they cannot afford to pay the new rate of 30% (which any company would refuse to do), the scheme becomes unviable. The trustees will then be 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.
The unions have also agreed to increased benefits to the scheme members. They are using this so that they can say they won some concessions from NATS. The fact is that these benefits will cost money (from the scheme) and will reduce the past service surplus even more rapidly and hasten the closure of the scheme. If the scheme has to be wound up, these benefits will be of very little value, to say the least!!
The above is not being advertised by NATS or the unions. The TU circular that appeared on the subject was (deliberately?) confusing, misleading, erroneous and very defensive as they realise that those who are aware of the facts know that a very serious and costly mistake has been made.
Your pension is in very serious danger - do something now!
[ 02 December 2001: Message edited by: OrangeAdair ]
The changes that have recently been agreed between NATS and the Trade Unions may be the beginning of the end for the NATS section of the CAA Pension Scheme. Although pensions may not be very interesting, please take the time to read and understand the following about the changes. It is important. Please make your views known on the matter to both the TUs and management. Also educate as many of your colleagues as you can.
NATS staff currently contribute 6% of their gross salary to the pension scheme. When the Airline Group took over, NATS also contributed 12.5% of your gross salary into the scheme.
When the pension scheme was split (between NATS & CAA) a valuation of the fund was performed up to 31/3/01. This showed a past service surplus of £584.3m in the NATS section; this is what is left after the pensions for the years worked so far have been allowed for. It does not take into account future years that will be worked. When the future years (future liabilities) are taken into account, there is a deficit in the scheme, not a surplus - this is the first time this has been the case.
When future liabilities are taken into account, NATS should currently be contributing at 30% (at the date of the last valuation - 31/3/01). However, the past service surplus is used to offset some of their contributions and by doing this they could contribute 12.5% indefinitely, without detriment to the scheme.
NATS asked the scheme’s Actuary to assess the effects of reducing their contribution rate to 10.8%, This could be done, but it would use up the surplus in about 16 years. They would then have to contribute at around 30% to maintain the scheme.
The latest agreement allows them to stop contributing completely (this was not recommended by the scheme's actuary, as the TU circular suggests). The past service surplus (that has been accumulated over many years) will now be completely used up in about 3 or 4 years. NATS will then have to contribute at 30+% to maintain the scheme. The unions have signed up to this without consulting the members.
This is important, because if in 3 years time NATS say they cannot afford to pay the new rate of 30% (which any company would refuse to do), the scheme becomes unviable. The trustees will then be 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.
The unions have also agreed to increased benefits to the scheme members. They are using this so that they can say they won some concessions from NATS. The fact is that these benefits will cost money (from the scheme) and will reduce the past service surplus even more rapidly and hasten the closure of the scheme. If the scheme has to be wound up, these benefits will be of very little value, to say the least!!
The above is not being advertised by NATS or the unions. The TU circular that appeared on the subject was (deliberately?) confusing, misleading, erroneous and very defensive as they realise that those who are aware of the facts know that a very serious and costly mistake has been made.
Your pension is in very serious danger - do something now!
[ 02 December 2001: Message edited by: OrangeAdair ]
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I've just managed to catch up with this debate after a nasty virus attack. So .....
As an ex BEC member and one who has maintained a healthy interest in what my succesors are doing I would like to comment.
I know Danny does not like names mentioned here but I'm sure he will not be accused of spreading slandererous statements.
Robin Morris has been the BEC and a general Union pensions expert for over 15 years. What he does not know about pensions is not worth knowing. He and the other BEC members did a superb job in guaranteeing our pension fund status in the legislation which eventually passed the bitter debate to complete the privatisation of NATS. Robin and the other BEC negotiators examined in detail all the advice and figures on offer and have taken the view that this is a deal worth taking AND there is NO significant risk to the long term health of our pension fund which they fought so hard to retain.
Contrary to previous posts the BEC have always been involved at the very highest levels of policy discussions and the involvement of a new management is not of any significance. For many years the serious decisions have been made way above the heads of NATS Executive but seldom above the Union sphere of involvement.
One question to all those who sudenly have an opinion on the intracacies of our pension fund. What would the opinion have been if it had been announced that there was a £350m surplus and all of it was being directed towards members benefits ???? Would we have seen all these comments about suspicious changes to the scheme ?
Bottom line has to be that we are employed to work as ATCOs. Those who dedicate a huge amount of their personal time to the greater good of us all deserve a bit of respect for the experience they gain. I am not one who leaves policy or actions unchallenged but on this issue the BEC have my 100% support.
[ 02 December 2001: Message edited by: 2 six 4 ]
As an ex BEC member and one who has maintained a healthy interest in what my succesors are doing I would like to comment.
I know Danny does not like names mentioned here but I'm sure he will not be accused of spreading slandererous statements.
Robin Morris has been the BEC and a general Union pensions expert for over 15 years. What he does not know about pensions is not worth knowing. He and the other BEC members did a superb job in guaranteeing our pension fund status in the legislation which eventually passed the bitter debate to complete the privatisation of NATS. Robin and the other BEC negotiators examined in detail all the advice and figures on offer and have taken the view that this is a deal worth taking AND there is NO significant risk to the long term health of our pension fund which they fought so hard to retain.
Contrary to previous posts the BEC have always been involved at the very highest levels of policy discussions and the involvement of a new management is not of any significance. For many years the serious decisions have been made way above the heads of NATS Executive but seldom above the Union sphere of involvement.
One question to all those who sudenly have an opinion on the intracacies of our pension fund. What would the opinion have been if it had been announced that there was a £350m surplus and all of it was being directed towards members benefits ???? Would we have seen all these comments about suspicious changes to the scheme ?
Bottom line has to be that we are employed to work as ATCOs. Those who dedicate a huge amount of their personal time to the greater good of us all deserve a bit of respect for the experience they gain. I am not one who leaves policy or actions unchallenged but on this issue the BEC have my 100% support.
[ 02 December 2001: Message edited by: 2 six 4 ]
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Well 264 what can I say! The introduction of names serves no purpose other than to put a specific person under pressure. This is not IMHO a sensible move. The BEC is more than one person.
However I draw your attention to the letter published by a trustee and apparently concurred with by another trustee, in which they reflect their deep concern for the future of our pension. I know these people well and trust their judgement above all others.
I know that Prospect/BEC had no option when it came to accepting TAG's requirement for a pension holiday, they are entitled to do this under existing legislation.
However I am deeply upset that my union did not see fit to keep me informed of developments as they were happening and the news was kept from me until it was let out by the trustees. Apparently the deal would have been done without our being given a chance to comment. This is what I am now doing.
Many NATS managers are also concerned about this arrangement and have publicly stated their opposition, I respect the opinion of many of these people.
Why not have the pension fund buy NATS? It can afford it! TAG have a massive debt to service, the interest payments are big enough, add to this the costs of running this company along with reduced revenue and you are looking at a dire situation.
For those of you working in ACCs you may not see much downturn in traffic, but look at the size of those aircraft and there alone you see a loss of income. We charge by the ton! At the London airports a B747 gives 7 times more income than a B737.
Hope this keeps the pot on the fire.
However I draw your attention to the letter published by a trustee and apparently concurred with by another trustee, in which they reflect their deep concern for the future of our pension. I know these people well and trust their judgement above all others.
I know that Prospect/BEC had no option when it came to accepting TAG's requirement for a pension holiday, they are entitled to do this under existing legislation.
However I am deeply upset that my union did not see fit to keep me informed of developments as they were happening and the news was kept from me until it was let out by the trustees. Apparently the deal would have been done without our being given a chance to comment. This is what I am now doing.
Many NATS managers are also concerned about this arrangement and have publicly stated their opposition, I respect the opinion of many of these people.
Why not have the pension fund buy NATS? It can afford it! TAG have a massive debt to service, the interest payments are big enough, add to this the costs of running this company along with reduced revenue and you are looking at a dire situation.
For those of you working in ACCs you may not see much downturn in traffic, but look at the size of those aircraft and there alone you see a loss of income. We charge by the ton! At the London airports a B747 gives 7 times more income than a B737.
Hope this keeps the pot on the fire.
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Very well said 2 six 4.
I don't claim to be a pensions expert but I know enough about it - and about those representing our interests - to know that if it was as blatant a threat to the scheme as some make out, they would never agree to it.
Because you pay into the scheme doesn't make you an expert. We all have to keep questioning... but have a little faith.
I don't claim to be a pensions expert but I know enough about it - and about those representing our interests - to know that if it was as blatant a threat to the scheme as some make out, they would never agree to it.
Because you pay into the scheme doesn't make you an expert. We all have to keep questioning... but have a little faith.
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I feel that our union has sold us down the river. It is bad enough that they have done so, but to do so against the advice of the trustees is unforgiveable. What really makes my blood boil is that they did so without consulting usa, the memners who they are supposed to represent !
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In response to 2six4 above. I am mindful of the time and effort that our union reps put into the job and am grateful for it. However, I am convinced that a potentially serious mistake has been made and that an attempt is being made to shift the blame.
People keep talking about a 'healthy surplus'. The £350m that is often mentioned does not take into account the scheme's future liabilities. In the past the surplus calculation has allowed for this and a real surplus has existed. This time the real surplus is in fact a deficit! NATS & TUs are now comparing apples with oranges, not the other way round as the recent TU background paper suggested!
If a real surplus existed, 2six4 is quite right, members would be more than happy to share in the benefits. But they would also be supportive in NATS' proposal to take a contributions holiday at this difficult time - if the scheme could afford it!
Given that the deal is done (and in any case NATS could have done it without it being given credence by TU agreement) we should now be making representations to NATS (either directly or by encouraging the unions) to give some concrete guarantees about the criteria that must be met for contributions to recommence. There is no way they will contribute at 30+%, if the scheme was to get to the stage where contributions at this level are required, it would fold - there is no alternative at that stage!!
We need to know at what level the past service surplus will be allowed to reduce to before contributions recommence. Will they start contributing if the actuary says they need to contribute at x% at one of the six monthly reviews - if so what is x? Will they expect us to make up some shortfall by increasing our contributions??
The TUs can go some way to redeeming themselves if they can negotiate an acceptable answer.
[ 04 December 2001: Message edited by: OrangeAdair ]
People keep talking about a 'healthy surplus'. The £350m that is often mentioned does not take into account the scheme's future liabilities. In the past the surplus calculation has allowed for this and a real surplus has existed. This time the real surplus is in fact a deficit! NATS & TUs are now comparing apples with oranges, not the other way round as the recent TU background paper suggested!
If a real surplus existed, 2six4 is quite right, members would be more than happy to share in the benefits. But they would also be supportive in NATS' proposal to take a contributions holiday at this difficult time - if the scheme could afford it!
Given that the deal is done (and in any case NATS could have done it without it being given credence by TU agreement) we should now be making representations to NATS (either directly or by encouraging the unions) to give some concrete guarantees about the criteria that must be met for contributions to recommence. There is no way they will contribute at 30+%, if the scheme was to get to the stage where contributions at this level are required, it would fold - there is no alternative at that stage!!
We need to know at what level the past service surplus will be allowed to reduce to before contributions recommence. Will they start contributing if the actuary says they need to contribute at x% at one of the six monthly reviews - if so what is x? Will they expect us to make up some shortfall by increasing our contributions??
The TUs can go some way to redeeming themselves if they can negotiate an acceptable answer.
[ 04 December 2001: Message edited by: OrangeAdair ]
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traffic - a couple of points. The pension fund is not allowed to invest in its own company never mind buy it. That was done some years ago by a media person and it did him no good.
I must have missed it but would be interested to see where the NATS managers have publicly opposed the NATS management actions. where is this info ?
I must have missed it but would be interested to see where the NATS managers have publicly opposed the NATS management actions. where is this info ?
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Well, it looks like most people aren't really bothered about their pensions. Maybe we are all too well paid and don't need the money?
I really hope I'm proved wrong - apathy still rules!?
I really hope I'm proved wrong - apathy still rules!?
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I think the number of posts shows there's not an apathetic audience on this subject, but there's no reason to jump to conclusions without considering all the facts.
1. Over recent years, if the only thing making money for the scheme was the employee and employer contributions then there would probably have always been a contribution rate of around 30%. The money is invested and healthy profits made which reduce the burden on contributions. This continues to be the case and - as with any sensible investor at the moment - i don't think they'll be investing within the aviation industry!
2. Under the 'trust of promise' should the scheme fold for any reason, NATS are obliged to offer 'an equitable scheme'. I think it unrealistic that management (NATS or TAG) would see it as a positive move to wind up one scheme only to have to pay horrendous start-up costs on an equally expensive new scheme.
I dislike the idea of a contributions holiday as much as the next future pensioner, but it's not quite as disasterous as some would like to make out.
1. Over recent years, if the only thing making money for the scheme was the employee and employer contributions then there would probably have always been a contribution rate of around 30%. The money is invested and healthy profits made which reduce the burden on contributions. This continues to be the case and - as with any sensible investor at the moment - i don't think they'll be investing within the aviation industry!
2. Under the 'trust of promise' should the scheme fold for any reason, NATS are obliged to offer 'an equitable scheme'. I think it unrealistic that management (NATS or TAG) would see it as a positive move to wind up one scheme only to have to pay horrendous start-up costs on an equally expensive new scheme.
I dislike the idea of a contributions holiday as much as the next future pensioner, but it's not quite as disasterous as some would like to make out.
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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).
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).
