British (Rentokil) Airways

[carrots]

We could have screwed everybody on PP1 to 4 because there was nobody in the company on those pay points due to the hiring freeze after 2001.

SSP payscale???

[Carnage Matey!]

I don't approve of that either, but can you find anybody else who's offering an FO position on the A320/B737 with free type rating and a gross pay + allowances in excess of £38K to an ab initio? No bond either.

[Re-Heat]

Yes, BAPS is rubbish, but those on that DC scheme are in a better position that those in NAPS, since they can move companies without being penalised.

BA can afford to pay website is utter rubbish - BA cannot afford to pay, and will be so heavily fined if NAPS is not closed to existing members or the funding hole is plugged, that it could even be worth shutting down the airline.

The trash on that website is unbelievable - if you think that you can possibly compare aircraft purchase funding that has been known for years in advance to a pensions defecit that is based upon promises made in the past yet whose future funding at that time is essentially unknown and highly fluctuating due to low interest rates, then you live in cloud cuckoo land.

Who wrote that trash about 300 year gilts? It is completely ignorant to any economics or finance. Assuming that low interest rates will rise in the future ludicrous - there is nothing to say they will especially if inflation has indeed been killed by independent central banks.

Take the company down if you want - don't say I didn't tell you.

[Cornflake]

The usual suspects - the usual irrelevances...

This is developing very well, but unfortunately as ever has become a debate between people defending their current advantages and those who (not un-naturally) envy them, and see no reason why they should go to the barricades over issues which cannot benefit them.
I regrettably side with those who feel the 'divide and conquer' strategy will win out. I think the pensions industry has been terminally screwed by that arrogant Scots b@stard in No 11, aided by the moral Scottish coward next door. However, that won't advance things. The market isn't really recovering, the deficit is not going to go away, and without any doubt at all, more and more Companies will follow Renotkil, and within 12 months, there will be an airline doing it.
Now, just for once, maybe we should accept things are not as we would wish, accept we will not get support from those not affected, and try and optimise the coming debacle. Even if the scheme is closed, there will be a deficit remaining, and it is NOT necessary for BA to top that up if and as and when they close the scheme. What we must ensure is that every accrued benefit IS protected and paid for, because that is not a given either. If the scheme were to wound up ( a different terminology which could apply if BA successfully made the case that the size of the deficit imperilled the Company's future) then they could freeze the fund, and make smaller contributions thereafter, probably equivalent to the DC scheme. That's what I would do, and then say the playing field was level, so sorry etc etc. How much sympathy do you think would be forthcoming from the existing DC members. I wouldn't have any for us if I were in their shoes - would you? (Well, not to the point of going on strike anyway!)
So, let's be realistic, let's not try and fight a war we can't win, but make bl00dy sure that what we are owed thus far is at least funded properly. This is not defeatism, it's realism - anyone thinking otherwise is deluding themselves, things are going to start going down the toilet in a National sense fairly shortly as Gordon's overspending finally comes home to roost, the Market will falter, some bigger names will start going down and more than a few Financial Directors will start doing basic sums on their calculators. The workforce is already split, Willie will need to make his mark in a big way sooner rather than later, we need to be ready rather than have our heads in the sand.

I wish I was wrong, but I don't think I am.

(Just read the Re Heat post - unfortunately I have to agree with every word.)

[Carnage Matey!]

What utter rubbish Re-Heat! Who exactly is going to 'fine' BA? The trustees? Perhaps the pensions regulator? And you really think that he is going to fine them so much that they force the company into bankruptcy with the subsequent liquidation of it's assets to pay off the deficit? Keep drinking the KoolAid Lloyd.

Cornflake - your claim that BA will not need to pay off the fund if they wind it up runs counter to the views of the professional actuaries and every armchair pundit on the TV. Who's got it wrong?

[whattimedoweland]

All this pension stuff is we the employees fault.I in fact now feel so guilty that on average I may live longer and people in high places let us know it is the problem!!.

Don't worry though,yet again the 'fat cats' will get their normal tasty payoffs and bonus for making us take the new deal whatever that turns out to be


.

Merry Christmas to them all.

WTDWL.

[ShortfinalFred]

I dont believe a word of the "BA cant afford it" campaigners. BA can afford NAPS if it wanted too, it just thinks it can get away with it by not doing so.

BIG MISTAKE!

I have never seen people so motivated by anything at BA before. If WW closes the scheme then BA will cease to be a functioning full service airline, full stop. There will be a strike the like of which has not been seen before. BA's working environment is not worth spit without NAPS to those of us who joined with it as part of our contracts, and have planned our financial lives around its being there.

Fear a man or woman with nothing to lose, and if NAPS goes we have nothing to lose. If the BA DC scheme is planned for our futures, then other employers offer way better terms than the derisory-termed BARP, some offer direct entry commands and most dont require you to be away from home as much. I think you'll finally get that increased pilot turnover you've been looking for. New joiners with no bond will qualify on type, get experience and leave, and those nearer the retirement end of the spectrum will leave for a better DC scheme to finish on, and a better working environement to boot.

LLoyd, PoD, Shirley, Dave, if you think you can carry this one off on your masters bidding you are living in a dreamworld - you are an ace away from industrial meltdown, and from the way you treat us these days you deserve it. "Professional pilots" - dont make me laugh - you treat us with such evident contempt it makes me physically sick. You are about to reap the benefit of years of disdain dished out our way. Enjoy it, I will.

[Tim Byatt]

I've been going a lot of digging about the NAPS deficit and uncovered a couple of interesting points.

1) When looking at the deficit BA are claiming it has risen from £928mil at the 2003 actuarial valuation, to an estimated £1.4bn now.
In fact the £1.4bn is using FRS17 accounting rules of pension for pension liabilities and uses a gilts/bonds based rate of assumed growth of assets. If you apply the same FRS17 rules to the 2003 valuation, the deficit in 2003 was £1.6bn.
i.e using FRS17 for measuring the deficit in 2003 and today, shows the situation has improved by approx £200mil, rather than deteriorated further as BA are trying to portray.

2) The actuaries valuation in 2003 (the purpose of which is to set the company [BA] contribution rate for the next 3 years 2004-2006) was carried out by Watson Wyatt, who at the same time were also carrying out the APS valuation. At the APS valuation it was decided that updated mortality data should be used to reflect the fact on average we are living longer. They therefore used 1992 data rather than 1980 data which had been used at previous valuations in both APS and NAPS.
** The NAPS valuation continued to use outdated 1980 mortality data in the 2003 valuation**
This would have reduced the liabilities of NAPS and reduced the declared deficit and the amount BA should have been paying in for the 2004-2006 period. (Yes they were paying in lots extra, but it should have been even more if the had used 1992 mortality data - as APS were using)
It is illogical that NAPS with its younger member age profile than APS was using more pessimistic life expectancy data than APS, and it was the same people doing both valuations at the same time !!

So despite NAPS using out of date data and therefore one could argue, BA were underpaying slightly, the deficit has in fact reduced.

I find this very telling fo why BA are so desperate to keep this quiet.

By the way, this info has come via 2 research papers published by RBC Capital Markets Open Forum Notes 3 and 21, by John Ralfe,an independent pensions consultant and consultant to the UK Accounting Standards Board on FRS17.

Tim Byatt

[Jetstream Rider]

There is a lot of rumor flying around about NAPS and the deficit. We are in need of some facts:

1. The company say the deficit is down to 2 things, living longer and low interest rates. In fact, of the 928 Million deficit, only 75 Million was attributed to living longer. Hardly a huge problem, being less than 10% of the deficit. Low interest is surely a problem, but long term it should even out, if we fix things in the interim.

2. The fact the tax laws have changed have not been discussed by BA at their briefings - this is one of the real problems.

3. We as pilots had no real control over whether NAPS was closed or not. BARP is no good, but how could we have done anything else? We were short of pilots and there would be no recruitment without agreeing on the pension, so what do we do? Watch the company die a slow death while we work extremely hard, or vote for an "industy leading pension" for the new bods, knowing full well that there are hardly any final salary pensions left open in the country.

4. I am in NAPS, not APS, but I don't have any hard feelings for those who are. I can't crystallise, nor do many things they can, but APS closed and NAPS opened. I will work to protect NAPS as that is what I was promised and signed up to. I will work to better BARP too, as you signed up to an "industry leader" not the poor cousin you have been given. The current Pilots are not guilty of ruining pensions, the government and other things are.

5. It is well acknowledged that the pension is in difficulty - I don't think anyone disagrees. What is important is that any changes are reversible. So we might have to reduce accrual and pay more in, but if we can increase accrual and decrease contributions when we are making loads more money, then I can't see a problem. I can see a problem if the fix is irreversible. If it is, then when we start making tons of cash all we have done is give our pensions to the share holders. If we never make tons of cash again - then so be it, at least we will have put in place a way of bettering things when we can.

6. In NAPS, accrual rate was increased a few years ago - this may have been a mistake, it may not have been. Accrual rates have been changed before, so why not change it again and review in a few years time?

7. With a deficit, interest is paid, rather than earned, so almost by definition it will get worse without changes being made.

8. If the pension pays out more than it gets in, if the gap is plugged by BA, then a deficit will continue to form - we do need to determine whether this is a one off, or a constant leak - so far no one has given us a clear message on this.

9. If interest rates stay low "for ever" then no one will be able to afford a house in a few years time. Gold is at a 200 year high at the moment, is that likely to stay too? I doubt it. These things swing one way and the other.

[Tim Byatt]

The crucial point is the deficit has reduced since 2003, not increased as BA would have us believe, when measured the same way, ie using FRS17.

Tim Byatt

[yachtno1]

And BA have been paying off their debt at around £1 Billion a year! If they close NAPS they will have to buy an insurance policy to pay for all NAPS pensions which will cost much more than the deficit! As I see it ...

[JW411]

For once in my aviation career I am in the right place at the right time.

I am in full receipt of the benefits of my Final Salary pension scheme (although I am still working).

The interesting thing about the whole process was the bit about the order of priorities in the event of the Pension Scheme failing.

I and those around me who have spent years and years of contributing to various pension shemes take (quite rightly) priority.

Therefore, should the pension fund find itself in real difficulties then those of you who are halfway through your career could find yourselves with NOTHING if the scheme is folded up because us old farts take priority.

However, I am sure that you would all accept that as a fact of life.

[RHINO]

JW 411 you write tosh.

[Cornflake]

Rhino, you may not like what JW has to say, but sadly (for us) he is absolutley correct. The prioritisation rules of our (and most if not all) DB schemes is fixed, the pensioners take priority over the members. In fact, Carnage needs a reality check, or possibly a wee chat with an actuary or Pensions Consultant - he would then discover there is a HUGE difference in the reality of winding a scheme up as opposed to closing it. I wish it were not so.
Jetstreamrider makes some good points too, but the trouble is that once one has increased personal contribution rates, or decreased benefits, then I have never heard of these things being subsequently re-instated. It's a bit like that crunt Brown and his 5 billion per annum tax raid on UK pensions schemes generally - you don't hear the Tories talking about reversing it do you????? Neither do you ever hear about Companies replacing benefits hacked as a result of cost cutting when times get better. Management agreeing to profit reductions and hence bonuses is about as common as Turkeys voting for Xmas!

The big problem with our Company, as demonstrated by the posts on here, is that when it comes to the crunch, you see NOTHING. There was all the hot air about strikes if the Pension Scheme was closed to new members. Then, when it was closed to new members, it was cunningly done at a time of zero recruitment. BALPA said they would be looking at as and when it actually affected the first pilot to join and be outwith the scheme. FuNny old thing, when that eventually came to pass, BALPA then were committed to helping organise the 'best DC scheme in the UK' and, er, what actually happened???
Nope, too disparate a workforce, too many fragmented interests - there will NOT be a strike, and Willie knows it, because it is not a clear cut, across all ranks issue. Captains, less than say 5 years to go, generally would not be too badly hurt. The next 5 year phase would be significantly affected, but not as much as if they struck. Below them - well, let's see what the proposal is etc etc and before you know it, we've been screwed again. Don't get me wrong, a united front would sort BA out, and yes, I think they probably COULD scrape by and fund it - but they won't, because they know their opposition is divided and will not go to the barricades in spite of all the hot air on here. Hence my call to at least secure what we have already earned, because management won't stop at stage one, they will be after cut after cut after cut - profits are up at the moment, but with hugely expanding EZY, Euro / American open skies, a/c replacement etc etc, there are still very large savings to be made by a nice new Irish broom........

[RHINO]

Cornflake nice post however your first two sentences are tosh as well. Suggest you go and look at the PPF website.
Your sentence about the prioritisation rules being fixed by the scheme rules has been superseded by the above. I could go on about the factual inaccurracies in this thread but don't want to miss last orders.

[Jetstream Rider]

Cornflake - I think you make some good points. In the past NAPS changed from 56ths to 52nds - ie and improvement when things looked good. There is no reason why it shouldn't in the future if things are similarly good. However, the guys who did that last time, may be re thinking it now, making it less likely. If we don't get a reversible fix, there is nothing we can do about it. If we do get a reversible fix, we do at least have some leverage.

Another key point is that most of the groundstaff have a relatively flat pay structure. Ours is on a steeper gradient, so if we were to get (for instance) a career averaged scheme, it would affect us more. In other words, we have more to lose than the groundstaff, who may not strike in the same vein as those you mentioned above. We could well be screwed.

[Wingswinger]

Priorities in Winding Up a Pension Scheme:

1. Costs and expenses of doing so.

2. Members benefits bought by VOLUNTARY contributions.

3. Pensions in payment ( without inflation increases ).

4. Pensions yet to be paid to non-retired members( without inflation increases ).

5. Increases to pensions in payment and to accrued benefits of the non-retired.

And, the law requires the scheme to be fully funded before it is wound up.

Current pensioners are 3rd priority.

[RHINO]

Wingswinger reread what you have written. Points one and two yes, however having written for the purposes of windup the scheme must be fully funded (on a buyout basis at your friendly insurance company) 3,4 and 5 are irrelevant.

[acbus1]

Final salary pension schemes are in crisis because of a lack of sound management by the companies concerned, inadequate legal constraints by government and because Chancellor "Robber" Brown has brazenly stolen £5bn a year from them for several years!

Now companies are telling their employess that it is they who must suffer for inept management, bad government and daylight robbery!

Wake up!

[Wingswinger]

RHINO,

What I wrote is an order of priority. An insurance company may buy-out a scheme "fully funded" but a bought-out scheme may not remain "fully-funded" in the future. There is, I believe, no requirement for an insurance company which buys-out a pension scheme to top it up if it runs into further trouble. Points 5,4 and 3 may then be operative. Please correct me if I am wrong