Are the BA DEP's getting the final salary pension ?
 

So....Did BALPA sort it out for the new joiners seeing that contracts seem to be going out >>?

ha ha ha ha ha ha ha ha ha ha ha ha ha ha ah ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha you can bet BALPA have secured the future of the existing final salary scheme mamebers - but that's all she wrote boys!

No they're getting a DC scheme. The companys proposal is pretty gash at the moment and BALPA are in dispute with the company about it. DEP contracts were delayed due to the dispute but now the company have gone ahead with recruitment anyway things are coming to a head. BA BALPA have been given a mandate by their members to press for an industry leading DC scheme, with a company contribution of at least 14% (current industry best). Expect unrest ahead.

Industry best? What a load of b*ll*cks! Just where did BA get that from? First Choice Airways puts in 15% of salary. Quite frankly if a small company like First Choice can put in 15% and have been doing so for over a decade then BA and BALPA needs to come up with something quite a bit better if they want it to be "current industry best"!

Sadly in the consultative ballot that was held - the majority of BA/BALPA members would not consider striking to get new entrants onto the FSS (criminal in IMHO as BA are creating a Bscale but the senior guys wont be affected like i will in 20yrs time)
They did majority vote to support action to improve the DC scheme, however the ballot form was complex, and low return rate - mean real striking support probably isnt there - unless BALPA make it a protest vote at all the other crap BA are up too!! Of course balpa (bacc) keep sticking to this stupid approach of tackling issues seperately instead of mounting a single protest vote.
With the oil price staying high, and the lack of a protest vote backing - i doubt we will see a ballot/strike just for new entrants DC scheme
truly saddening..

Oh dear, I offer my most humble apologies to 7E7 for my shameful error in being a whole 1% out in corporate pension contributions. I will live with the eternal shame of incorrectly recalling that the best rate was 14% and not 15%. BTW they were BALPAs figures, not BAs. If you know of any company contributing more than 15% to a DC then I'm sure BALPA would love to hear.

tster7444 - I'd hazard a guess I've got as long in BA as you, if not longer. That doesn't mean I live in a fluffy world where final salary schemes are going to be commercially viable again regardless of aging populations, increases in life expectancies and highway robbery from consecutive chancellors. I've heard all the arguments in favour of striking to keep the FSS, but it still boils down to the unpleasant fact that the numbers just don't add up anymore and stamping our feet, crying or going on strike isn't going to change that.

When we were "consulted" BA were planning to offer the DEPs "12%". This was against other "leading" airlines of, say, 15% (Virgin).

However, BA's "12%" was of pensionable salary - not far off 75% of your "basic". So for BA's "12%" read more like 9%. BA would need to contribute more like 20% to match Virgin's...

Those who have received employment offers from BA, what rate is quoted as Company Contributions?

NoD

Hand solo, my frustration was not intended to be personal!

Fair enough, consider my extreme sarcasm to be retracted!:ok:

BA Company Contribution
 

BA Letter states that the company will pay 12% of pensionable salary and the employee must pay 5% of the same.

As stated by Nigel on Draft, BA pensionable salary is 75% of basic pay (excl any allowances).

The wording in the BA Retirement Plan documentation reads more like the employee pays 5% and the company will make this up to 12% of pensionalble salary!!!

I have been assured by personnel that the letter supercedes the plan documentation.

BTW Where does the definition of Pensionable Salary come from?

According to the Inland Revenue, it is defined as the salary uopn which pension contributions are made (how helpful).

Where have BA come up with this arbitrary 75% from? Is it 75% at each pay pont and how are training / management increases factored in?

For Info: In Virgin, as long as the employee pays in 6%, then the company will pay in 15%, again all of pensionable salary. The big difference is that in Virgin the pensionable salary is the Basic Pay excl. allowances/flight pay.

I underrstand that the BA DEP DC scheme is still not finalised and that BALPA are hoping for a bigger company contribution.

At least if the pensionable salary equalled basic pay (which is slightly less than in VS for starters!) then we'd be on the road to a more comparable scheme to other companies, if still a way off industry leading.

Surely the company can afford to put more in as the main reason for having a DC scheme over a DB scheme is that the company is not liable to make up any shortfall in the investment. The current offer is way short of the final salary scheme so must be saving BA a fortune as well as reducing future liability. Shame it's at the expense of the staff.

Cripple et al

The 'pensionable' amount in BA is actually 80% of basic AFAIK.

This came about in the restructuring we did in 2003.

Within NAPS (FSS) all pilots who retire from the same paypoint in the same seat will have the same pensionable pay, as I said set at 80% of the longhaul pilots basic pay. It just so happened to work out that if you retired with a 2/3 pension you would then be entitled to the max pension the government (then) allowed. Things have obviously changed with the pension cap etc.

As to what will happen within BA for new joiners, well the FSS has been lost to them, will the pensionable pay still be 80% of the LH equivalent pay, or 80% of your own pay or some other number? Will the company contributions be increased? Yet to be decided.

TopBunk

Thanks for the clarification. I just wanted to reply to Nigel On Draft's query as to what the new joiners had been told by the company.

I had thought that the Pensionable pay may have come from the Pension Cap vs Top Captains's increment. This 80% therefore makes sense for a final salary scheme. However, as you say, with the pension cap changes and also the fact that in a defined contribution scheme you want to save as much as possible as you are not necessarily going to reach the cap, I don't see the need to define a lower pensionable salary.

The figure quoted as pensionable pay on my contract is exactly 75% of the Year 1 F/O basic pay (which I believe is the same on all fleets). There is no mention of whether this will change with seniority/fleet etc. New joiners are part of the BA Retirement Plan (BARP) which is totally separate from NAPS etc

As to the final outcome.. we shall wait and see. I've already signed up anyway!

Without the new entrants to support the FSS from below coupled with the massive current deficit any pilot under say forty something is living in cloud cookie land if they think expected pension will equal the real one.

I was discussing this issue in the pub last night with a fellow Nigel. The conclusion was, there are ONLY three reasons to join BA:

1. FSS Pension

2. FSS Pension

3. FSS Pension

I wonder how long it will take before the current 9% deal will sink in with new entrants. Hopefully whilst they still have time to do some extracurricular pension provision.

Harry

I should state from the outset, that I voted in favour of retaining the FSS for new joiners. I think it has been short sighted in the extreme for some people to imagine that this issue (as currently resolved) will not affect 'their' FSS.

I also feel somewhat ashamed that we have been complicit in the creation of what has already been described as a 'B' payscale.

My only question is this, and it has already been alluded to by other posters: Why WOULD anybody now join BA, bearing in mind the very significant disadvantages of so doing?

I really hope the people accepting their job offers don't end up very bitter and disappointed, in 10 years time, when they are still looking at another 5 years for their first command.

Still, at least they won't be 'trapped' by an FSS!

Creation of what is, in effect, a B scale may one day prove to be very divisive amongst the pilots. Twenty years from now some of you may be looking forward to retiring on a nice final salary.

Then you're told that the the fund cannot support it and can only service those who have retired, leaving you to retire on less than you expected. What sort of support/sympathy do you expect from the B scale guys for industrial action? You reap what you sow.

Monty

You are possibly correct in that it could end up being a divisive thorn in BALPA's side in BA.

However, what you seem to ignore is that the BA Executive Team would never have reopened the FSS just for pilots, as if that had even being intimated, every other staff group would have been back to the table. That is what happens in BA - every staff group is examining every detail of what happens to every other group. The Executive had taken a corporate decision to close the FSS to new joiners and they would have seen the company go under before they would have reopened it to anyone. For that reason the BACC, after consultation with BALPA members, took the pragmatic view that we must endeavour to get the best possible (industry leading) DC pension scheme for new joiners. At present we have a way to go on that objective, even though the new pilots are getting a higher company contribution rate than most.

Top Bunk

Take your point totally. I'm not with BA but have mates that are. What I will say is that nobody under 40 years can bank on the cast-iron certainty of final salary schemes. The only folks who can (and that's not 100%) are ex-public employees - civil servants, MOD etc because our taxes guarantee it. Once a scheme is closed, that's it. It can only pay out and the only money coming in is from investment returns.

I would hope that 30 years from now the last cadet retires, lives till he's 90 and then croaks, leaving a few grand to donate to the annual Christmas bash. Recent experience has reinforced the view that pensions can be double-edged swords. Diversify.

Cripple,

For info, VS's Pensionable salary is Basic Salary PLUS Flight Pay.

Pensions - Tonight with Trevor McDonald
 

Looking at these interesting posts I wondered if anyone can help me. ITV1's current affairs programme, Tonight with Trevor McDonald, is researching an important programme on pensions and we are looking for willing participants. We want to raise awareness of the concerns surrounding pensions and why proper regulation of the pensions industry is so important.

If you have a deferred company pension (DB) - for example with British Airways or another company - or you are paying into a final salary scheme now, you are one of millions who might be interested in finding out more. If you have a private or stakeholder pension we would like to hear from you also.

Please feel to contact me on 0161 827 2408. Any initial conversations will be treated confidentially.
Many thanks,
Ross
Ross Charnock
Tonight with Trevor McDonald
Tel: 0161 827 2408

Rossi,

Be aware that employees of many companies (including BA) aren't permitted to talk to the press about company issues such as pensions, without the express permission of the company in question. Otherwise, disciplinary action may follow.

Good luck though, we need all the help we can get...

Thanks for letting me know, I was hoping someone might be prepared to contribute where they have left the company but still have a deferred pension with them. I thought this might make it easier for them to participate. You do not know anyone like that at all?

Thanks for the support, we hope it will be an important, awareness raising programme.

Is it definitely 12% contribution from BA as contracts still contradict themselves. One page saying 5% from employees and 12% from BA and then others stating that BA will make up the total contribution from employer and employee to 12%?

I cannot believe that BA's defined contribution scheme would pay only 12% including the employee's 5% contribution - I would suggest that there has either been a misprint or a misunderstanding.

For comparison purposes, in Virgin's DC pension scheme the company pays 15% of pensionable salary (all of basic plus all of flight pay) as long as the employee contributes 6% - making a total of 21% contributed. By law, the maximum employee contribution is 15% (to a Group rather than a Personal pension plan), making a theoretical maximum pension contribution of 30% of pensionable pay.

Scroggs

Was difficult to believe - but apparently was picked up when first contracts went out - found it hard to believe that contracts were not amended to correct this. I believe that internal BA people have had letters indicating that it is definitely 5+12% - i.e 17% of pensionable pay which is 75% of basic pay.

Any thoughts on whether it would be better to opt out of the pension and do it on your own? Or do the Additional Voluntary Contributions make up for it by letting you put in as much as you want?

AH64,

I don't know much about pensions, but how could it be better to go it alone ? 12% from the company of pensionable may be a pittance, but it is a pittance greater than zero.......

Don't go it alone! You may find that the company are willing to make their 12% contribution to a private pension scheme of your choice - it's worth asking, especially if you're not happy with BA's choice of pension scheme.

As for AVCs, you can top up pension contributions via AVCs up to the limit of income as determined by the Inland Revenue. For a personal pension, this limit is age-related. For a company (i.e. group) scheme, this is 30% of salary (total of pension and AVC contributions, including company contributions). See the Inland Revenue's website for more info - alternatively, get hold of a copy of Intuit's TaxCalc which has a very useful guide to pension contributions. I'm sure Microsoft Money has something similar. If you're in BALPA, have a chat with their financial people.

Scroggs et al

Thanks not intending on going alone just exploring the options. Have thought about the pension scheme of my choice but was under the impression that the majority of large companies like BA might not like the extra administration involved with dealing with lots of extra schemes.

If I have a private pension scheme from previous employers can I just transfer the old contributions into the new scheme?

Might give BALPA a ring for the BFS.

Yes, you can usually do that without any great hassle. Duuno about BA, but I'm pretty sure Virgin will contribute directly to an alternative pension provider if you do all the legwork. I seem to remember that the only disadvantage was that your contributions weren't net of 40% tax at source, so you had to claim the difference on your tax return. Mind you, it's a while since I investigated this, so that info may be well out of date by now.

A friend of mine is a new joiner at BA and has recently received their Pension forecast for the British Airways Retirement Plan (BARP).

Based on a 6% employee and 12% company contribution (of 75% basic pay) after 25 years service they will get ...................................wait for it ............................less than £10K a year as a pension.


Industry leading?

Forecast is based on their current, (i.e. joining salary), and assume no increase in salary over 25 years. Anyone with half a braincell realises BA salary increases every year plus eventual move to the LHS so a current forecast has no relation to the actual final pension!;)

Actually, they assume:

1. Inflation will be 2.5% a year.
2. Pensionable pay will increase by 4% a year.
3. Future contributions will grow in line with increases to earnings.

The estimated pension is then converted to todays prices for comparison to current income.

Finger Bob - presumably your friend is ticking on in years, as my prediction from my current pension plan, which is much meaner than BA's, estimates mine at anywhere between 20000-30000.

I can, by the way, confirm that in my shiny new contract it is still mentioned that the employee pays 5%. But it is totally unclear wether the 12% they mention is what BA will pay, or that BA will just add another 7% to get to the 12%.

Fact: at Martinair (owned by KLM), the company contribution is 25% of each month's basic salary. And the employee is not forced to pay own contributions if not desired.

In most airlines I hear from, the percentage (employer) varies from 8% till 20%.
And if you want, you can ALWAYS get the whole sum at the end of your career if you want. Not sure if this is possible at BA too...

Anyways: I very much like this new pension scheme for the fact that the contributions are put in a private acount of a fund. Thus cannot be touched if BA would ever be in serious trouble. What is contributed every month, is yours. For sure: that's why they call it a group insurance.
Reassuring in a hostile aviation world I'd say.
If they get the percentage (employer) up to a reasonable level (and the employee's down to a free choice) , I am happy...

Also, if you leave BA you get the balance of your pension fund back as a lump sum.

I've just joined BA from the low-cost world. I was quite disappointed in both the level of the pensionable pay (only 35k) and the level of contribution (17% overall), but it didn't stop me signing up.

My previous pension scheme was woeful by comparison (13% overall) although the pensionable pay was full basic salary.

Overall I calculated I will be better off due to the tax position after allowances, increase in basic salary on an annual basis, and therefore higher annual contributions on an ongoing basis, and the option / ability to increase my personal contributions over my career.

Besides that - it's BA. Who knows what could lie round the corner?