NATS PENSION - IN DANGER?!
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NATS PENSION - IN DANGER?!
Apparently the Airline Group ( owners of NATS) have agreed, with our unions, a pensions contribution holiday for themselves.
This is very disturbing as the NATS staff trustees are not in favour of this idea.
To summarise (a lot).......
They are concerned that at the end of this "holiday" period the likely contribution from AG will be about 30%, which is not likely to be realisable.
Under the rules, if this occurred, it would then behove the trustees to wind up the non-viable scheme and thereby allow the employers the easy and legal way out of pension contributions!
JUST WHO DOES OUR UNION REPRESENT??
This is very disturbing as the NATS staff trustees are not in favour of this idea.
To summarise (a lot).......
They are concerned that at the end of this "holiday" period the likely contribution from AG will be about 30%, which is not likely to be realisable.
Under the rules, if this occurred, it would then behove the trustees to wind up the non-viable scheme and thereby allow the employers the easy and legal way out of pension contributions!
JUST WHO DOES OUR UNION REPRESENT??
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Apparently .... your information is interesting but in my humble experience our Union represents US and has done so well over the years. They were the ones who lobbied hard in Parliament and had the legislation framed so that we could remain in a joint pension scheme - which is one of the best in the industry. Although the conjecture is alarming I would be content to judge the actions of all sides when the information is published. 
[ 21 November 2001: Message edited by: Findo ]
[ 21 November 2001: Message edited by: Findo ]
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Traffic info is correct. Our TU Pensions Committee representatives seem to be about [ within 48hrs] to agree a deal with the NATS management that would give the company a 'Contributions Holiday' for 3 years and then 18 months at a very reduced rate. After which in order to meet the fund requirements for laibilities the employers contribution would have to rise to 30% [ actuarial advice]. I doubt that any employer would agree to a contribution rate of that level. The member trustees have advised the TU reps not to agree the deal. The latter appeared to have decided to ignore the advice of our Member Trustees, a situation that has never occurred before.
I suggest that all NATS staff should be urgently seeking answers from their TU reps as to why the Member trustee advice has been ignored on this occasion.
I suggest that all NATS staff should be urgently seeking answers from their TU reps as to why the Member trustee advice has been ignored on this occasion.
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What worries me about this Pension "holiday" is that appears to be based on the surplus identified in the fund at the actuarial valuation - earlier this year? Since September 11th, stock markets have taken a big hit and so have investors in them - namely pension funds. How much of the surplus has been wiped out? does ANYONE (including the trustees) know for SURE?
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Pensions holiday season is coming then...
On the question of the size of the surplus due to stock market fluctuations, there was a huge dip after Sept 11 but then a recovery.
As far as I am aware TAG are entitled to use some of the surplus for a contributions holiday, BUT by the same rights that give them control of the surplus, they are also legally obliged to ensure the fund remains viable.
I find the idea of TU & Trustees agreeing to a deal that would compromise all our pensions in the future very hard to believe.
On the question of the size of the surplus due to stock market fluctuations, there was a huge dip after Sept 11 but then a recovery.
As far as I am aware TAG are entitled to use some of the surplus for a contributions holiday, BUT by the same rights that give them control of the surplus, they are also legally obliged to ensure the fund remains viable.
I find the idea of TU & Trustees agreeing to a deal that would compromise all our pensions in the future very hard to believe.
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TAG have been speaking to the union with regards to taking a payment holiday, what makes it worse is that there is now no surplus on the pension, that is what we were told earlier this month. Hopefully someone has been playing with the figures to keep TAG's and Blairs fingers out of the pie. Aint PPP great
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Bono - a few assumptions there about the union being able to "agree" anything about the NATS contributions. Maybe the trustees will confirm it, but I think each contributor representative can act independently.
In the meantime, as I said before - "Although the conjecture is alarming I would be content to judge the actions of all sides when the information is published."
We wait with interest.
In the meantime, as I said before - "Although the conjecture is alarming I would be content to judge the actions of all sides when the information is published."
We wait with interest.
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I don't think it's a case of anyone agreeing to let TAG do something... I think there is an agreement made between the sides on what to do with a surplus. The TU gets some of it's requests granted and so do management.
We get increased benefits, they get to stop making payments into the scheme for a while.
To me it seems no more of a threat than the last time the employers contribution rate was reduced. The only difference is this in a temporary saving.
Don't forget that those negotiating on the TU side have a pension due to them too. Do you think they'd put it at risk?
We get increased benefits, they get to stop making payments into the scheme for a while.
To me it seems no more of a threat than the last time the employers contribution rate was reduced. The only difference is this in a temporary saving.
Don't forget that those negotiating on the TU side have a pension due to them too. Do you think they'd put it at risk?
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Heard on 'working lunch' today that a lot of companies are pulling out of 'final salary' pensions because they are too expensive.
Im not normally one to subscribe to rumour and speculation (so why am I on this BB?), but I wonder if the pension holiday is just the first step in a move by TAG to change our pensions to an investment type...
Just a thought........
Im not normally one to subscribe to rumour and speculation (so why am I on this BB?), but I wonder if the pension holiday is just the first step in a move by TAG to change our pensions to an investment type...
Just a thought........
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The whole thing stinks, we are being shafted and the process appears to be being done behind our backs. TAG clearly wants out of our expensive "Rolls-Royce" pension fund and quickly. This isn't a pensions holiday but a pensions bail out all to be conveniently blamed on September 11th. What does the union think it is doing that represents the staff??
Moneybox live on Radio 4 at 8pm Monday 26 November has a pensions special where it will be discussing the flood of companies desparate to opt out of final salary pension schemes and into stock market based pensions. Listen and be scared, be very scared.
[ 23 November 2001: Message edited by: Steep Approach ]
Moneybox live on Radio 4 at 8pm Monday 26 November has a pensions special where it will be discussing the flood of companies desparate to opt out of final salary pension schemes and into stock market based pensions. Listen and be scared, be very scared.
[ 23 November 2001: Message edited by: Steep Approach ]
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Sorry folks, but I think some here are trying to paint this blacker than it is.
The act of parliament that allowed PPP protected our pension - it cannot be altered so easily.
The figures show that by taking a 3 year contributions holiday, TAG are saving about as much money as it is costing to implement the improvements to the scheme that were asked for. You have to accept it can't all be take take take.
All those involved in the negotiations seem to be happy that the agreed moves will not threaten the scheme in the future.
The basic mistake we (myself included) sometimes make is to assume that as it's our pension fund, then any surplus belongs to us. It doesn't.
The act of parliament that allowed PPP protected our pension - it cannot be altered so easily.
The figures show that by taking a 3 year contributions holiday, TAG are saving about as much money as it is costing to implement the improvements to the scheme that were asked for. You have to accept it can't all be take take take.
All those involved in the negotiations seem to be happy that the agreed moves will not threaten the scheme in the future.
The basic mistake we (myself included) sometimes make is to assume that as it's our pension fund, then any surplus belongs to us. It doesn't.
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Well I hope your right BV. I'll remain sceptical until I have an official briefing 
WRT the holiday, can someone tell me, If the employer does not contribute, do the staff continue to contribute?
WRT the holiday, can someone tell me, If the employer does not contribute, do the staff continue to contribute?
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I must say I have read this all with interest...however let us be aware that all private companies would prefer to get out of final salary pension schemes.
There will be a greater demand on our pension "surplus" as not only are we approaching a retirement bulge, but also more people are retiring early.
Add to this those that will be made redundant before they reach normal retirement age and the numbers start to rise quickly. The fund has done well but I think that any pensions holiday should be deferred for some time (1 year?) until we see how the economy pans out. Yres, TAG are entitled to this "holiday" but the timing could be better.
Will the 6 monthly review have actuarial advice? I wonder.......
There will be a greater demand on our pension "surplus" as not only are we approaching a retirement bulge, but also more people are retiring early.
Add to this those that will be made redundant before they reach normal retirement age and the numbers start to rise quickly. The fund has done well but I think that any pensions holiday should be deferred for some time (1 year?) until we see how the economy pans out. Yres, TAG are entitled to this "holiday" but the timing could be better.
Will the 6 monthly review have actuarial advice? I wonder.......
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For those interested here are the comments of one of the Members Trustees to the Scheme.
As someone who once worked in the Pensions industry I'm extremely concerned by the proposed 'holiday' following the recent actuarial valuation and even more concerned that the Union has apparently agreed without consultation with the membership. One of the union committee members who was involved in discussions has a lot to gain by the introduction of 57ths or 58ths in the near future, a concession which is unsustainable in the long term.
NATS PENSION PROPOSALS – FACT SHEET AND COMMENTARY
I have produced the following fact sheet in order to provide information to NATS members of the CAA Pension Scheme (CAAPS) regarding the current proposals by NATS for an employer’s pension contribution holiday and some benefit improvements. These are to be paid for from the past service surplus, identified by the Scheme’s actuary at his 31 March 2001 valuation updated at 30 September to take account of investment market fluctuations during the intervening period. In view of these proposals the member Trustees of the CAA Pension Scheme are extremely concerned about the security of the future funding of the Pension Scheme, and I believe we have now reached a watershed in the life cycle of the Scheme.
Barry Gibbs (retired members’ Trustee) and myself sent e-mails to members of the Trade Unions Side of the NATS Pensions Committee, prior to its reconvened meeting on 13 November, reiterating our previously expressed views, endorsed by the other member Trustees, strongly advising the TUS against accepting either a contribution holiday or benefit improvements, at this point in time. Our reasons were contained in an earlier fact sheet, distributed to them at the Pensions Committee Meeting held on 19 October, which are highlighted by the following points:
1. The surplus being considered is the past service surplus, which takes no account of future service liabilities.
2. Following previous valuations the past service surplus has been used to meet future service liabilities before the residual (net surplus) has been considered for distribution.
3. Neither the employer nor the TUS has ever before suggested that the gross surplus should be the one open to negotiation, by the Pensions Committee, for distribution.
4. This will be the first time, within my memory, that the gross surplus is insufficient to meet future service liabilities. (Estimated deficit of £275.5m).
5. Although the Actuary says that, actuarially, Trustees need not take into account future service liabilities, I do not accept that this is either a sensible or prudent approach if we wish for the continuation of the Scheme in its present form.
6. At 31 March valuation, the employer’s contribution rate, in respect of future service, was calculated to be 30.5%. The past service surplus, of £563.3m at that time, could reduce this to 12.5% for an indefinite period. The agreed reduction of the employer contribution rate to 10.8% reduced this indefinite period to a period of just under 16 years.
7. At 30 September, the employer’s contribution rate, in respect of future service, was calculated to be 30.1%. The updated, lower, past service surplus, of £322.5m, could reduce this to 19.7% for an indefinite period. Maintaining the employer contribution rate of 10.8% reduced this indefinite period to 8.5 years only.
8. These calculations take no account of any benefit improvements.
9. If an employer’s contribution holiday is taken, and the original proposed benefit improvements introduced, the past service surplus will provide for 3 years employer's contribution holiday then 18 months at a 6% contribution rate. (Any variations to the benefit improvements will change these periods to a small extent).
10. At the end of this period the Actuary sees no likelihood, at the present time, of the employer being required to contribute at anything less than 30.1%, or 31.5% if the proposed benefit improvements are introduced. I do not believe that this contribution rate would be acceptable to any employer, or sustainable over any significant period of time.
11. Legal advice tells us that if NATS does not or could not pay the required contributions, the Trustees may be forced to wind up the NATS Section, in accordance with the provisions of the Statutory Instrument. As it would be the Trustees instigating this, NATS would not be in breach of Clause 3.1 of the Trust of Promise which would thus not give any protection.
12. The above points, plus consideration of the volatility of the financial markets and continuing uncertainty due to world events and economic consequences, together with suggestions by Bacon & Woodrow in their October 'Analysis' that "Trustees should be cautious about 'spending' any surplus shown in the valuation on, for example, contribution reductions or benefit improvements", and difficulties being experienced by other organisations having taken contribution holidays, lead me to the firm conclusion that the last thing we should be accepting is either a contribution holiday or benefit improvements.
At the Pensions Committee meeting on 13 November, the Trade Unions Side chose to ignore the advice given by the member Trustees, in their role as advisors to the Committee, and agreed to an employer’s contribution holiday for NATS, and a revised benefit improvement package.
I apologise for the length of this document but I believe NATS members of the CAAPS have the right to know the facts behind the proposal so that they may have the opportunity to express their views on the issue. Acceptance of these proposals, at this time, will, I believe, lead to the detriment of the Scheme and the future demise of the NATS Section of the CAAPS, as we know it.
GLOSSARY
Past service surplus – the excess of the actuarial value of assets over the actuarial value of the past service ongoing liabilities.
Past service ongoing liabilities – the present value of the benefits which members are entitled to, based on service completed to the valuation date and allowing for projected future increases to pay through to retirement or date of leaving service. It also includes the value of the benefits for members who have already left service i.e. pensioners and preserved pensions.
Future service liabilities – the present value of liabilities for active members in respect of service after the valuation.
As someone who once worked in the Pensions industry I'm extremely concerned by the proposed 'holiday' following the recent actuarial valuation and even more concerned that the Union has apparently agreed without consultation with the membership. One of the union committee members who was involved in discussions has a lot to gain by the introduction of 57ths or 58ths in the near future, a concession which is unsustainable in the long term.
NATS PENSION PROPOSALS – FACT SHEET AND COMMENTARY
I have produced the following fact sheet in order to provide information to NATS members of the CAA Pension Scheme (CAAPS) regarding the current proposals by NATS for an employer’s pension contribution holiday and some benefit improvements. These are to be paid for from the past service surplus, identified by the Scheme’s actuary at his 31 March 2001 valuation updated at 30 September to take account of investment market fluctuations during the intervening period. In view of these proposals the member Trustees of the CAA Pension Scheme are extremely concerned about the security of the future funding of the Pension Scheme, and I believe we have now reached a watershed in the life cycle of the Scheme.
Barry Gibbs (retired members’ Trustee) and myself sent e-mails to members of the Trade Unions Side of the NATS Pensions Committee, prior to its reconvened meeting on 13 November, reiterating our previously expressed views, endorsed by the other member Trustees, strongly advising the TUS against accepting either a contribution holiday or benefit improvements, at this point in time. Our reasons were contained in an earlier fact sheet, distributed to them at the Pensions Committee Meeting held on 19 October, which are highlighted by the following points:
1. The surplus being considered is the past service surplus, which takes no account of future service liabilities.
2. Following previous valuations the past service surplus has been used to meet future service liabilities before the residual (net surplus) has been considered for distribution.
3. Neither the employer nor the TUS has ever before suggested that the gross surplus should be the one open to negotiation, by the Pensions Committee, for distribution.
4. This will be the first time, within my memory, that the gross surplus is insufficient to meet future service liabilities. (Estimated deficit of £275.5m).
5. Although the Actuary says that, actuarially, Trustees need not take into account future service liabilities, I do not accept that this is either a sensible or prudent approach if we wish for the continuation of the Scheme in its present form.
6. At 31 March valuation, the employer’s contribution rate, in respect of future service, was calculated to be 30.5%. The past service surplus, of £563.3m at that time, could reduce this to 12.5% for an indefinite period. The agreed reduction of the employer contribution rate to 10.8% reduced this indefinite period to a period of just under 16 years.
7. At 30 September, the employer’s contribution rate, in respect of future service, was calculated to be 30.1%. The updated, lower, past service surplus, of £322.5m, could reduce this to 19.7% for an indefinite period. Maintaining the employer contribution rate of 10.8% reduced this indefinite period to 8.5 years only.
8. These calculations take no account of any benefit improvements.
9. If an employer’s contribution holiday is taken, and the original proposed benefit improvements introduced, the past service surplus will provide for 3 years employer's contribution holiday then 18 months at a 6% contribution rate. (Any variations to the benefit improvements will change these periods to a small extent).
10. At the end of this period the Actuary sees no likelihood, at the present time, of the employer being required to contribute at anything less than 30.1%, or 31.5% if the proposed benefit improvements are introduced. I do not believe that this contribution rate would be acceptable to any employer, or sustainable over any significant period of time.
11. Legal advice tells us that if NATS does not or could not pay the required contributions, the Trustees may be forced to wind up the NATS Section, in accordance with the provisions of the Statutory Instrument. As it would be the Trustees instigating this, NATS would not be in breach of Clause 3.1 of the Trust of Promise which would thus not give any protection.
12. The above points, plus consideration of the volatility of the financial markets and continuing uncertainty due to world events and economic consequences, together with suggestions by Bacon & Woodrow in their October 'Analysis' that "Trustees should be cautious about 'spending' any surplus shown in the valuation on, for example, contribution reductions or benefit improvements", and difficulties being experienced by other organisations having taken contribution holidays, lead me to the firm conclusion that the last thing we should be accepting is either a contribution holiday or benefit improvements.
At the Pensions Committee meeting on 13 November, the Trade Unions Side chose to ignore the advice given by the member Trustees, in their role as advisors to the Committee, and agreed to an employer’s contribution holiday for NATS, and a revised benefit improvement package.
I apologise for the length of this document but I believe NATS members of the CAAPS have the right to know the facts behind the proposal so that they may have the opportunity to express their views on the issue. Acceptance of these proposals, at this time, will, I believe, lead to the detriment of the Scheme and the future demise of the NATS Section of the CAAPS, as we know it.
GLOSSARY
Past service surplus – the excess of the actuarial value of assets over the actuarial value of the past service ongoing liabilities.
Past service ongoing liabilities – the present value of the benefits which members are entitled to, based on service completed to the valuation date and allowing for projected future increases to pay through to retirement or date of leaving service. It also includes the value of the benefits for members who have already left service i.e. pensioners and preserved pensions.
Future service liabilities – the present value of liabilities for active members in respect of service after the valuation.