BA NAPS Pension - Revaluation Doubles Defecit
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BA Pensions Shortfall NAPS scheme
BA NAPS/NAPS2 pension schemes shortfall of major concern.Consultations started for possible solutions.Any sensible suggestions ?
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I notice in the bumf that I received that for further info I should ask john. Ok then, JR, what is your personal contribution to the pension deficit? Sorry, silly me, I didn't read the small print, only the workers have to sacrifice their pension benefits. Hope RE is enjoying his pension boost of £60K per annum.
My sensible suggestion is this, get rid of the entire management team including young William and get cheaper replacements. Lots of management types must want to work at BA.
Harry
My sensible suggestion is this, get rid of the entire management team including young William and get cheaper replacements. Lots of management types must want to work at BA.
Harry
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If by sensible suggestions, you mean ones that aren't going to leave you worse off (in one respect or another) than your present projections otherwise suggest, there aren't any.
There are a number of threads on this site discussing the issue.
As arcniz suggests, there is a Greek tragedy unfolding as we speak and it will migrate across the Pond...
The public private sector argument going on in the UK at the moment isn't helping those industries that are actually doing the wealth creation.
The Economist mentions how Delphi, the US largest auto parts supplier, has recently sought Ch 11 protection as well. General Motors $15 billion market capitalization is only half the value of its unfunded pension liabilities. In turn it has $70 billion of unfunded medical liabilities.
The numbers involved have far too many zeros behind them to enable a quick solution as Carnage suggests.
Carnage indeed.
There are a number of threads on this site discussing the issue.
As arcniz suggests, there is a Greek tragedy unfolding as we speak and it will migrate across the Pond...
The public private sector argument going on in the UK at the moment isn't helping those industries that are actually doing the wealth creation.
The Economist mentions how Delphi, the US largest auto parts supplier, has recently sought Ch 11 protection as well. General Motors $15 billion market capitalization is only half the value of its unfunded pension liabilities. In turn it has $70 billion of unfunded medical liabilities.
The numbers involved have far too many zeros behind them to enable a quick solution as Carnage suggests.
Carnage indeed.
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opting out of ba pension
does anybody know about government legislation or has anybody opted out of the BA pension scheme. was just thinking its not such a good thing to lose your job and your pension together. it would only take a hull loss or bird flu? for the whole lot to go down the pan.
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Are you in a BA pension scheme? If so which one and how close to NRA are you? I know a bit about it but I'd contact BALPA Financial Services if I were you - assuming you are a member.
You can always use the hull loss/bird flu/sars/plague of frogs argument but at some point you've got to put your money somewhere . My guess is the advisors would tell you that the current NAPS 1 is a fairly good bet for some of your money, but you should putting any excess cash elsewhere.
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pension
ta.
flown with a few people who were commuting the pension elsewhere. probably not too bad if you were about to retire. though if there were many they may have to stop answering the phone
flown with a few people who were commuting the pension elsewhere. probably not too bad if you were about to retire. though if there were many they may have to stop answering the phone
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Well, actually no, they wouldn't. I thought the same but I was wrong. Everyone who pulls out reduces the future liability and therefore the deficit so the BA pensions managers do not seem to be unduly worried if a lot of people take their pot elsewhere. At least that is what I was told by the experts at BFS.
I am certain that the advice would be to stay with it because of the large contributions made by the company. You cannot hope to match those yourself for the rest of your career. However, as NRA approaches, you should seek advice from an IFA (BFS?) because there are many more things you can do with a pension pot after the new rules come in on 6 April. You need to know about and understand them so you can make the choices which are right for you. My advice would be to go to one of the pension drawdown workshops run by BFS.
I am certain that the advice would be to stay with it because of the large contributions made by the company. You cannot hope to match those yourself for the rest of your career. However, as NRA approaches, you should seek advice from an IFA (BFS?) because there are many more things you can do with a pension pot after the new rules come in on 6 April. You need to know about and understand them so you can make the choices which are right for you. My advice would be to go to one of the pension drawdown workshops run by BFS.
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BA NAPS Pension - Revaluation Doubles Defecit
Details below; link unavailable. Probably useful to start a new thread rather than linking to the end of the previous slanging match!
Actuarial valuation sees BA pensions deficit reaching £2.1b
Graham Dunn, London (29Sep06, 14:00 GMT, 529 words)
British Airways’ (BA) deficit in its key pensions scheme has doubled to around £2.1 billion ($4 billion), a fresh actuarial valuation released today has shown.
The actuarial valuation, which is carried out every three years, shows the deficit in BA’s New Airways Pension Scheme (NAPS) is set to rise from £928 million to around £2.1 billion.
BA says it would need to make annual contributions of nearly £500 million – raising its contribution from five to 12 times that of members – to fund the pension scheme if it remains unchanged.
The Oneworld carrier last October began a communications campaign to raise awareness of the pensions deficit, which comes despite a doubling of BA contributions and a stock market recovery, and in March this year put forward proposals aimed at tackling the deficit.
These include raising the age of normal retirement from the current compulsory 55 to 60 for pilots and ultimately to 65 for cabin crew; inflation-capped pensionable pay increases and capped pension increases on retirement. But BA notes it would remain a final salary scheme – rather than one linked to career average earnings – and involves no increase in staff contribution rates.
If the changes are accepted, BA will make a £500 million one-off payment into the scheme
BA CEO Willie Walsh says: “The deficit is massive and we must deal with it. I believe our proposal is a fair solution which addresses the funding problem and shares the cost of securing the future of our pensions and BA.”
Since making the proposals in March, BA has been in talks with unions and trustees. A spokesman for the carrier says talks with unions are continuing.
The proposals came under fire from unions when first introduced and one union, the T&G, has already reiterated its concerns today.
T&G national secretary for civil aviation Brendan Gold says: “We have always acknowledged that there is a funding problem but today’s news does not change our view that BA’s pension cuts are unfair, unacceptable and do not represent a starting point for negotiations. The company is profitable, has been reducing debt and is not in crisis.”
British Air Line Pilots Association secretary general Jim McAuslan describes the deficit as “eye-watering”, although he says the union will ask its own actuary to review the assumptions made by the scheme’s accountants.
“BALPA starts from the premise that BA is responsible for this deficit and their proposed contribution of £500 million is just not enough – and that ‘working until you drop’ is not a solution either,” says McAulsan. “But there is no denying that the deficit announcement is a stretch, so finding a negotiated way through is important both to BALPA members and the airline.”
He says the union will continue to consult its members – which have so far indicated they are seeking choice rather than a one-size-fits-all solution – while also taking a long-term view. “Pension valuations change and pension negotiations are for life, not just around gloomy valuations. Any negotiated changes this time must have a reverse gear,” he says.
BA’s NAPS scheme was launched in 1983 and has nearly 70,000 members – 33,500 of whom are still active members. The scheme was closed in March 2003.
Source: Air Transport Intelligence news
Actuarial valuation sees BA pensions deficit reaching £2.1b
Graham Dunn, London (29Sep06, 14:00 GMT, 529 words)
British Airways’ (BA) deficit in its key pensions scheme has doubled to around £2.1 billion ($4 billion), a fresh actuarial valuation released today has shown.
The actuarial valuation, which is carried out every three years, shows the deficit in BA’s New Airways Pension Scheme (NAPS) is set to rise from £928 million to around £2.1 billion.
BA says it would need to make annual contributions of nearly £500 million – raising its contribution from five to 12 times that of members – to fund the pension scheme if it remains unchanged.
The Oneworld carrier last October began a communications campaign to raise awareness of the pensions deficit, which comes despite a doubling of BA contributions and a stock market recovery, and in March this year put forward proposals aimed at tackling the deficit.
These include raising the age of normal retirement from the current compulsory 55 to 60 for pilots and ultimately to 65 for cabin crew; inflation-capped pensionable pay increases and capped pension increases on retirement. But BA notes it would remain a final salary scheme – rather than one linked to career average earnings – and involves no increase in staff contribution rates.
If the changes are accepted, BA will make a £500 million one-off payment into the scheme
BA CEO Willie Walsh says: “The deficit is massive and we must deal with it. I believe our proposal is a fair solution which addresses the funding problem and shares the cost of securing the future of our pensions and BA.”
Since making the proposals in March, BA has been in talks with unions and trustees. A spokesman for the carrier says talks with unions are continuing.
The proposals came under fire from unions when first introduced and one union, the T&G, has already reiterated its concerns today.
T&G national secretary for civil aviation Brendan Gold says: “We have always acknowledged that there is a funding problem but today’s news does not change our view that BA’s pension cuts are unfair, unacceptable and do not represent a starting point for negotiations. The company is profitable, has been reducing debt and is not in crisis.”
British Air Line Pilots Association secretary general Jim McAuslan describes the deficit as “eye-watering”, although he says the union will ask its own actuary to review the assumptions made by the scheme’s accountants.
“BALPA starts from the premise that BA is responsible for this deficit and their proposed contribution of £500 million is just not enough – and that ‘working until you drop’ is not a solution either,” says McAulsan. “But there is no denying that the deficit announcement is a stretch, so finding a negotiated way through is important both to BALPA members and the airline.”
He says the union will continue to consult its members – which have so far indicated they are seeking choice rather than a one-size-fits-all solution – while also taking a long-term view. “Pension valuations change and pension negotiations are for life, not just around gloomy valuations. Any negotiated changes this time must have a reverse gear,” he says.
BA’s NAPS scheme was launched in 1983 and has nearly 70,000 members – 33,500 of whom are still active members. The scheme was closed in March 2003.
Source: Air Transport Intelligence news
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Today's papers infer that WW wants pilots and cabin crews to contribute to dealing with this now huge deficit by a gradual complete overhaul in work practices....A will-happen strike, the terrorist threat loses and an uncontrollable pension deficit spells something needs to give, but no-one wants to play!
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While other companies, such as Boots, saw the problem coming and shifted their pension funds from equities towards bonds early in the stock market slump, BA waited until near the bottom of the market. Had they recognised they had missed the boat, and waited, the NAPS fund would have recovered along with the stock market. It's hardly the employees' fault.
With BA profits rising and fuel prices falling it's becoming harder for BA to justify the claim they can only afford £500m to fix a problem largely of their own making. Things are slowly beginning to turn in the unions' favour. I see no reason why they should rush into a settlement they may regret.
On the other hand a commitment by BA to continue the final salary scheme is worth an awful lot of money to its employees. Ask any pensioner.
With BA profits rising and fuel prices falling it's becoming harder for BA to justify the claim they can only afford £500m to fix a problem largely of their own making. Things are slowly beginning to turn in the unions' favour. I see no reason why they should rush into a settlement they may regret.
On the other hand a commitment by BA to continue the final salary scheme is worth an awful lot of money to its employees. Ask any pensioner.
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That depends on the conditions and how long you've got left to go. Under the current proposals myself and hundreds of other BA flight crew are actually better off under an average salary scheme!
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It is the same the whole world over.........
Investing in your retirement is difficult, at best risky, pop a cork or two if you got it right, at worse see you in the soup kitchen.
Property is the pension fund in the UK at the moment and fuelled by current informed "Sky News" corresondents will continue to be so for the foreseeable future.
Investing in your retirement is difficult, at best risky, pop a cork or two if you got it right, at worse see you in the soup kitchen.
Property is the pension fund in the UK at the moment and fuelled by current informed "Sky News" corresondents will continue to be so for the foreseeable future.
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Can't say I agree with that, Candoo.
At the moment property in the UK is fuelled entirely by out-of-control immigration. That simply can't continue.
The safest pension is still a balanced, well-run pension fund. BA used to have two, before a certain ailing Chief Exec encouraged his Bean-counter to interfere with them.
At the moment property in the UK is fuelled entirely by out-of-control immigration. That simply can't continue.
The safest pension is still a balanced, well-run pension fund. BA used to have two, before a certain ailing Chief Exec encouraged his Bean-counter to interfere with them.
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Albert Driver,
The investment of the BA Pension Funds lies with the schemes Trustees. Their Trustee board includes Member Nominated Trustees (MNT's), BA pilots, noinated by their work colleagues.
The scheme's investment is NOT the responsibility of the employer, but that of the Trustees.
Every Direct Benefit scheme will show an increased deficit at it's new actuarial valuation. The main reason is not recent investment performance, indeed in many cases that has been fairly good over the last 2 years, but with new mortality figures that are being used within the pensions industry.
Presuming the last BA valuation was about 3 years ago, new tables which reflect us living much longer into retirement have come into effect. This has a HUGE impact on the valuation of schemes such as BA's, and indeed ALL Final Salary schemes.
30W
The investment of the BA Pension Funds lies with the schemes Trustees. Their Trustee board includes Member Nominated Trustees (MNT's), BA pilots, noinated by their work colleagues.
The scheme's investment is NOT the responsibility of the employer, but that of the Trustees.
Every Direct Benefit scheme will show an increased deficit at it's new actuarial valuation. The main reason is not recent investment performance, indeed in many cases that has been fairly good over the last 2 years, but with new mortality figures that are being used within the pensions industry.
Presuming the last BA valuation was about 3 years ago, new tables which reflect us living much longer into retirement have come into effect. This has a HUGE impact on the valuation of schemes such as BA's, and indeed ALL Final Salary schemes.
30W
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30W makes some valid comments - the problem with the open-ended promises made is that people simply do not know how long the current generation is going to live, and the commitment to those people is therefore far higher than many imagined when those promises were made.
Just to comment as well on the perception that bonds are a "safe" investment made a few posts higher: the reason that the scheme would want to invest in a bond is that the value of a bond moves in line with interest rates, but the future liabilities of the fund are determined also by interest rates. As the value of the two move together, with greater bond values occurring when liabilities are valued higher (i.e. with low interest rates), it is deemed safe for the pension fund. Let me stress that bonds are not a purely "safe" investment - there is always the chance of company, or even country bankrupties (Argentina), which write off the value of those bonds.
The problem with bonds is not only that it locks you into the defecit, but when the estimated longevity of the pensioners moves upwards (as at the moment), there is no comparable step rise in your assets!
As with any investment, a mixture of investments is wise, including all of:
Bonds
Equities
Property
Private Equity Funds
Hedge Funds
Currency
and of course, Cash
On another point, property is not at a high value due to any more people trying to invest in it. It is instead showing classic "bubble" attributes, as investments are fuelled by cheap debt (low interest rates), city bonuses, and the psychology of missing out on the historic property rises.
Just to comment as well on the perception that bonds are a "safe" investment made a few posts higher: the reason that the scheme would want to invest in a bond is that the value of a bond moves in line with interest rates, but the future liabilities of the fund are determined also by interest rates. As the value of the two move together, with greater bond values occurring when liabilities are valued higher (i.e. with low interest rates), it is deemed safe for the pension fund. Let me stress that bonds are not a purely "safe" investment - there is always the chance of company, or even country bankrupties (Argentina), which write off the value of those bonds.
The problem with bonds is not only that it locks you into the defecit, but when the estimated longevity of the pensioners moves upwards (as at the moment), there is no comparable step rise in your assets!
As with any investment, a mixture of investments is wise, including all of:
Bonds
Equities
Property
Private Equity Funds
Hedge Funds
Currency
and of course, Cash
On another point, property is not at a high value due to any more people trying to invest in it. It is instead showing classic "bubble" attributes, as investments are fuelled by cheap debt (low interest rates), city bonuses, and the psychology of missing out on the historic property rises.
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It strikes me as ironic that BA expects the new joiners (along with those long termers already in the final salary scheme) to work longer yet they won't be benefitting at all from the final salary scheme since the old boys allowed it to be closed off with as much as a wimper. Bit perverse really isn't it?
Mind you probably no different to any of us youngins now who are paying our taxes yet will find that when 65 (or whatever the retirement age is then) comes around that there is no money in the kitty and we will have to fend for ourselves. Tell them to go figure would be my advice.
Mind you probably no different to any of us youngins now who are paying our taxes yet will find that when 65 (or whatever the retirement age is then) comes around that there is no money in the kitty and we will have to fend for ourselves. Tell them to go figure would be my advice.