Do You Really Think Your Pension Is Safe!?
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Do You Really Think Your Pension Is Safe!?
It seems many pilots really believe they are going to pick up a final salary pension when they retire. If you watched the Channel 4 documentary 30 minutes the other night you may start to believe otherwise.
If the company you work for goes bust or is sold your pension is more than likely to evapororate into thin air. As 30 minutes pointed out, YOUR PENSION BELONGS TO THE COMPANY, NOT YOU! The company may just decide to wind it up and there is not a legal thing you can do about it.
The new goverment protection scheme is similar to a pension itself, if the scheme runs out of money, you kiss goodbye to your pension. The scheme it was modelled on in the States currently is a disaster with a mult million defecit.
30 minutes has published some information on its web site
www.channel4/30minutes. This also contains a letter that has been drawn up by a legal eagle that you should send to your CEO. If you do not get it back signed saying that the company will honour its pension obligation the writing is on the wall.
Whats BALPA doing about all this or as usual are they just sitting on the fence? The pension problem is the most serious threat to pilot employment and retirement but is not being treated seriously. The time to act is now, not when you find yourself retired on a state pension.
Sorry, that should have been
www.channel4.com/30minutes
If the company you work for goes bust or is sold your pension is more than likely to evapororate into thin air. As 30 minutes pointed out, YOUR PENSION BELONGS TO THE COMPANY, NOT YOU! The company may just decide to wind it up and there is not a legal thing you can do about it.
The new goverment protection scheme is similar to a pension itself, if the scheme runs out of money, you kiss goodbye to your pension. The scheme it was modelled on in the States currently is a disaster with a mult million defecit.
30 minutes has published some information on its web site
www.channel4/30minutes. This also contains a letter that has been drawn up by a legal eagle that you should send to your CEO. If you do not get it back signed saying that the company will honour its pension obligation the writing is on the wall.
Whats BALPA doing about all this or as usual are they just sitting on the fence? The pension problem is the most serious threat to pilot employment and retirement but is not being treated seriously. The time to act is now, not when you find yourself retired on a state pension.
Sorry, that should have been
www.channel4.com/30minutes
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Well with its Pensions Sub-Committees and people studying Pensions in BALPA and BFS, what exactly do you expect BALPA can possibly do that it is not already doing? It is not BALPA that made the rules, and BALPA is one tiny niche outside the whole of UK Industrial Law. Pension Regulations are really the law of the land within Inland Revenue Laws and Finance Acts. BALPA is one little voice on the outside. May not be loud, but it's the only voice I've got!
You should be writing to Blair & Brown (and see where that gets you). That's the law- tough isn't it? You can't trust anybody these days.
You should be writing to Blair & Brown (and see where that gets you). That's the law- tough isn't it? You can't trust anybody these days.
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Suggest you go to the channel 4 site for starters before you respond!
A commitee isnt going to solve the problem but an undertaking from your employer regarding their intention regarding the long term future of the fund is an obvious help.
No point writing to President Blair or Brown, it was Browns tax changes in 1997 that started the slippery slope for final salary pensions. Best option is to vote this pathetic goverment out.
What do I expect BALPA to do;
Well considering the small amount of airlines there are in this country I would expect them to write to each company and get an undertaking of intention as sugested on the channel 4 site.
They could also suggest that each company operating a final salary scheme produce a 6 monthly forecast for each member stating the likelyhood that the fund can meet its obligations. If you have a unit trust you get this information, so why not a pension forecast based on whats in the fund and whats likely to be paid out.(Please do not confuse this with the statement of the amount you will get on retirement).
There aslo should be a change in the law that allows companies to withold this information. Failure to disclose or pay a pension should be treated like any other breach of contact within employment law.
Theres a lot more that could be done if more pilots became united to ensure companies are not going to explore the pension loopholes. Tomorrow is to late.
No point writing to President Blair or Brown, it was Browns tax changes in 1997 that started the slippery slope for final salary pensions. Best option is to vote this pathetic goverment out.
What do I expect BALPA to do;
Well considering the small amount of airlines there are in this country I would expect them to write to each company and get an undertaking of intention as sugested on the channel 4 site.
They could also suggest that each company operating a final salary scheme produce a 6 monthly forecast for each member stating the likelyhood that the fund can meet its obligations. If you have a unit trust you get this information, so why not a pension forecast based on whats in the fund and whats likely to be paid out.(Please do not confuse this with the statement of the amount you will get on retirement).
There aslo should be a change in the law that allows companies to withold this information. Failure to disclose or pay a pension should be treated like any other breach of contact within employment law.
Theres a lot more that could be done if more pilots became united to ensure companies are not going to explore the pension loopholes. Tomorrow is to late, action needs to be taken now. get on the channel 4 site print off the letter and send it to your CEO dont wait around for some commitee to help you out. remeber camels and humps!
A commitee isnt going to solve the problem but an undertaking from your employer regarding their intention regarding the long term future of the fund is an obvious help.
No point writing to President Blair or Brown, it was Browns tax changes in 1997 that started the slippery slope for final salary pensions. Best option is to vote this pathetic goverment out.
What do I expect BALPA to do;
Well considering the small amount of airlines there are in this country I would expect them to write to each company and get an undertaking of intention as sugested on the channel 4 site.
They could also suggest that each company operating a final salary scheme produce a 6 monthly forecast for each member stating the likelyhood that the fund can meet its obligations. If you have a unit trust you get this information, so why not a pension forecast based on whats in the fund and whats likely to be paid out.(Please do not confuse this with the statement of the amount you will get on retirement).
There aslo should be a change in the law that allows companies to withold this information. Failure to disclose or pay a pension should be treated like any other breach of contact within employment law.
Theres a lot more that could be done if more pilots became united to ensure companies are not going to explore the pension loopholes. Tomorrow is to late.
No point writing to President Blair or Brown, it was Browns tax changes in 1997 that started the slippery slope for final salary pensions. Best option is to vote this pathetic goverment out.
What do I expect BALPA to do;
Well considering the small amount of airlines there are in this country I would expect them to write to each company and get an undertaking of intention as sugested on the channel 4 site.
They could also suggest that each company operating a final salary scheme produce a 6 monthly forecast for each member stating the likelyhood that the fund can meet its obligations. If you have a unit trust you get this information, so why not a pension forecast based on whats in the fund and whats likely to be paid out.(Please do not confuse this with the statement of the amount you will get on retirement).
There aslo should be a change in the law that allows companies to withold this information. Failure to disclose or pay a pension should be treated like any other breach of contact within employment law.
Theres a lot more that could be done if more pilots became united to ensure companies are not going to explore the pension loopholes. Tomorrow is to late, action needs to be taken now. get on the channel 4 site print off the letter and send it to your CEO dont wait around for some commitee to help you out. remeber camels and humps!
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Well BALPA can ask, and I've seen suggestions that company chairmen be sent letters by employees asking for assurances that pension obligations will be fulfilled. All very well, but they will either:
Ignore (most likely)
or
Say "No."
End of Chapter 1
What next? I don't like it any more than you do, but BALPA, along with other unions, is doing what it can in the face of hostile, anti-employee rules and a Government that doesn't like you having your own pension (it doesn't wantto give you one either, but that is a different story).
I'd already been to this website and read this- it told me nothing we didn't already know and have discussed in the BALPA forum. We know about it and it's not new- it's just a shock when realisation comes.
So, ball in your court!
Ignore (most likely)
or
Say "No."
End of Chapter 1
What next? I don't like it any more than you do, but BALPA, along with other unions, is doing what it can in the face of hostile, anti-employee rules and a Government that doesn't like you having your own pension (it doesn't wantto give you one either, but that is a different story).
I'd already been to this website and read this- it told me nothing we didn't already know and have discussed in the BALPA forum. We know about it and it's not new- it's just a shock when realisation comes.
So, ball in your court!
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One - small - advantage of my defined contribution pension scheme is it's mine; my company's fate will not determine my pension's existance (though it might affect its final value!).
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Knowing about it wont really solve the problem. Forming a committee wont solve it either.
Remember the days when trade unions actually took effective action to encourage management attention. I am not saying we need a Red Robbo but we need some leaders who can actually solve what is going to be an absolute disaster for a large section of the pilot workforce.
The pathetic scheme launced by the goverment today is based on £400,000,000. How many schemes is that going to protect, one, two, four, its a joke and we are all involved with the most vulnerable industry of all?
Heres looking forward to the future on a state pension of £100 per week!
PS the TGWU are organising a march to London, perhaps the BALPA pension comittee could attend, on expenses of course?
Remember the days when trade unions actually took effective action to encourage management attention. I am not saying we need a Red Robbo but we need some leaders who can actually solve what is going to be an absolute disaster for a large section of the pilot workforce.
The pathetic scheme launced by the goverment today is based on £400,000,000. How many schemes is that going to protect, one, two, four, its a joke and we are all involved with the most vulnerable industry of all?
Heres looking forward to the future on a state pension of £100 per week!
PS the TGWU are organising a march to London, perhaps the BALPA pension comittee could attend, on expenses of course?
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The pension never belongs to the company per se - what you mean is that the pensioner has no legal automatic right to the money. What's the difference? The company cannot raid the pension pot like Maxwell did, and simply take the contributions made to it by pensioners for itself: what it can do is wind up the scheme by closing it to new entrants, or both new entrants and further contributions if it gets itself in a mess.
The problem that arises is that it has been a legal requirement since the mid-1990s to pay the existing pensioners in full before non-pensioners are paid a penny out from the scheme. Furthermore there is little obligation to fully fund the scheme when the value of their investments falls from companies who are either unable to do so or are wound up by choice - there are of course many other creditors to bust companies and the pension scheme is not first in line by any means at all.
Two problems have arisen:
(1) Contribution holidays - there is no way on earth that companies are not going to take contribution holidays when the scheme is overfunded. In the good years of the late 1990s, company contributions that would normally be made were halted to prevent the scheme being overfunded, which would result in their contributions being fully taxed. When the scheme value falls however these contributions would help the scheme maintain value, but of course in such times companies can't afford to top up additionally to pay back what they weren't required. There is good reason to have this rule to prevent corporation tax evasion, however it hits the pension scheme unfairly as a result. The answer is to fund it with a bond as M&S have recently announced - if it works is another matter!
(2) The schemes are underfunded by actuarial estimate, not in real money terms as the investments are on paper, and have not been liquidated. As the future is uncertain, these too may be incorrect and markets may shoot up and cover all potential liabilities in the end. A pension of £1,000 per year per the example in the programme is only an estimate now, not what will actually happen. The problem lies in that all estimates are based upon the best information we have now, but are never going to smooth over the peaks and troughs of the markets in which the assets of the scheme are invested.
Look at the accounts for the scheme instead - they come out every year, unless you want the scheme to be massively burdened with actuarial and accountancy costs 6 times higher than at present.
I agree entirely, so long as it doesn't bankrupt the company.
The law needs to changes to ensure that the companies take responsibility as M&S appear to have done with theirs.
Edit - the ridiculous situation whereby companies that take over another and shut down operations and pension scheme while still operating themselves is crazy. There has to be a law initiated to prevent them doing this and taking responsibility for the pensioners of the acquisition as well.
The problem that arises is that it has been a legal requirement since the mid-1990s to pay the existing pensioners in full before non-pensioners are paid a penny out from the scheme. Furthermore there is little obligation to fully fund the scheme when the value of their investments falls from companies who are either unable to do so or are wound up by choice - there are of course many other creditors to bust companies and the pension scheme is not first in line by any means at all.
Two problems have arisen:
(1) Contribution holidays - there is no way on earth that companies are not going to take contribution holidays when the scheme is overfunded. In the good years of the late 1990s, company contributions that would normally be made were halted to prevent the scheme being overfunded, which would result in their contributions being fully taxed. When the scheme value falls however these contributions would help the scheme maintain value, but of course in such times companies can't afford to top up additionally to pay back what they weren't required. There is good reason to have this rule to prevent corporation tax evasion, however it hits the pension scheme unfairly as a result. The answer is to fund it with a bond as M&S have recently announced - if it works is another matter!
(2) The schemes are underfunded by actuarial estimate, not in real money terms as the investments are on paper, and have not been liquidated. As the future is uncertain, these too may be incorrect and markets may shoot up and cover all potential liabilities in the end. A pension of £1,000 per year per the example in the programme is only an estimate now, not what will actually happen. The problem lies in that all estimates are based upon the best information we have now, but are never going to smooth over the peaks and troughs of the markets in which the assets of the scheme are invested.
They could also suggest that each company operating a final salary scheme produce a 6 monthly forecast for each member stating the likelyhood that the fund can meet its obligations. If you have a unit trust you get this information, so why not a pension forecast based on whats in the fund and whats likely to be paid out.
There aslo should be a change in the law that allows companies to withold this information. Failure to disclose or pay a pension should be treated like any other breach of contact within employment law.
The law needs to changes to ensure that the companies take responsibility as M&S appear to have done with theirs.
Edit - the ridiculous situation whereby companies that take over another and shut down operations and pension scheme while still operating themselves is crazy. There has to be a law initiated to prevent them doing this and taking responsibility for the pensioners of the acquisition as well.
TC
