TWO THOUSAND furious Airways Pension Scheme (APS) members attended meetings at Ascot Racecourse on Monday, where they tore into the BA-appointed trustees who have used their built-in majority on the scheme’s board to transfer the inflation measure of pensions from RPI to CPI.
The change has cost the 25,000 APS members thousands of pounds and will cost each of them tens or even hundreds of thousands of pounds more as years go by .Following Chancellor Osborne’s announcement last year that public sector pensions are to be uprated in line with the consumer price index (CPI) instead of the retail price index (RPI), as a money-saving measure, the APS trustees transferred the pensions over to CPI.
Two meetings at Ascot Racecourse on Monday voted unanimously for a ballot of the 25,000 APS members over the return of the RPI measure and agreed to go to the courts to challenge the change.
Monday’s meetings were called after the resignation of three trustees of the APS (Airways Pension Scheme) earlier this year over the change to CPI.
Monday afternoon’s meeting opened with three BA-appointed trustee speakers, who emphasised the ‘fragile’ economic position of British Airways and implied that it is in the interests of APS members to receive the lower-yielding CPI-based payments.
The BA-appointed chairman of the trustees, Paul Spencer received a frosty reception as he repeatedly called into question the financial stability of British Airways and the possible consequences of its collapse on the APS.
‘If BA was to become insolvent and APS was wound up you would receive pensions that would be considerably lower than either CPI or RPI,’ he warned.
‘We are a long way off from our ultimate objective of having total security for your pensions,’ he continued, adding: ‘BA’s credit rating is below investment grade.’
He went on to say: ‘Economic growth in the core markets on which BA depends is fragile,’ before concluding: ‘We are a long way off from having security for your pension.’
The other two platform speakers continued in the same theme.
Michael Pardoe, APS Scheme Actuary, said: ‘There is a lot of uncertainty and risk associated with solvency level estimates.’
In trying to give a ‘broad indication of benefit cuts if BA was to become insolvent,’ he threatened: ‘There simply isn’t enough money in the fund to cover either CPI or RPI in this eventuality.’
Anthony Arto, Legal Advisor to the scheme, claimed: ‘The scheme rules require your pensions to rise in accordance with CPI,’ adding: ‘It has never been an absolute right for you to have RPI increases.’
Warning of the ‘volatile strength of British Airways,’ he spoke feelingly when he said: ‘If BA failed and there was not sufficient funds to pay your benefits, the trustees would be held to account.’
Next to speak were the three elected trustees who resigned earlier this year.
Cliff Pocock resigned as a trustee on 14th April.
He said: ‘It’s been presented as a complex issue. But it boils down to simple principles. Who is responsible for funding the deficit in APS? The employer.’
He continued: ‘CPI builds up a declining standard of living. A one per cent gap between CPI and RPI amounts to £400 million.
‘The only way to resolve this matter once and for all is to take it to court, which could cost two, three or four million pounds of your money, but the replacement of RPI by CPI is costing you four-to-six-hundred-million.’
Mike Post, who resigned as a trustee in March, said: ‘In 1948 APS was created. In 1984 New Airways Pension Scheme (NAPS) was formed when BA was privatised.’
He told how APS members had fought against attempts to make them all go over to NAPS.
‘NAPS is an inferior scheme. We paid 30-50 per cent higher contributions to APS to guarantee inflation proofing.
‘In 1989 APS was in surplus, but then BA took a 14 year contribution holiday and by 2002 APS funds were depleted by £330 million.’
The third trustee who resigned, Graham Tomlin, said: ‘Does the APS pension scheme have the resources to pay RPI? The answer is yes. BA are the ones who took the pension contribution holiday.
‘APS was previously in surplus. Where did the money go? We know where it went. It went to BA.
‘We must go to court. We must consider the merits of taking a class action against BA.
‘They promised us RPI when we joined. It cannot be right. It cannot be just.
‘Paul Spencer says he’s an independent chair, but he cannot be so. He’s paid by BA and he who pays the piper . . .’
The meeting went on unanimously to pass a resolution to pursue the restoration of the RPI.
After the meeting, speaking to News Line outside the racecourse, BA engineer, Alan Cross said: ‘There is enormous frustration that the BA-appointed trustees have a built-in majority.
‘There are 12 trustees – six appointed by BA and six elected by us.
‘But when there is an even split, the chairman, who is one of the appointees, has the casting vote. There can be no democracy when the chairman has two votes.’
Alan’s father, Arthur Cross, a retired BA engineer, said: ‘There is a definite conflict of interest. It’s a stitch-up.’
Pensioner James Gough said: ‘We have been very angry for a long time. The company took a pensions holiday, while pensioners continued to pay money into the fund.
‘The trustees should represent us, but half of them represent BA management.’
Pensioner Mike Barnard said: ‘We are very distressed. Unbeknown to us, there has been collusion to get benefits to the NAPS scheme. That’s because the BA-appointed trustees sit on both boards.’
Association of British Airways Pensioners (ABAP) member Ian Heath said: ‘It’s so far so good. At both of the two meetings there was a unanimous vote to ballot all the members on the demand for the return of RPI and the removal of CPI, which means a 20-30 per cent loss on our pensions.’
Chair of ABAP, Dayne Markham, said: ‘We’re very pleased with the direction of today’s meetings. It will lead to the pension scheme doing morally what it should for the 25,000 APS members who are affected.
‘And if we get it sorted for APS, it will also be sorted for NAPS.
‘When BA was privatised, we were assured that our pensions would continue to be protected.’
Retired aircraft purchasing manager and ABAP member John Bennington said: ‘We are all very angry indeed. The government has not directed private companies to pay CPI and many have not. People are being robbed thousands a month.
‘Individuals who live to a good age are set to lose hundreds of thousands of pounds.’
Outside the Ascot meetings ABAP members were handing out explanatory leaflets.
‘Does changing from RPI to CPI really make that much of a difference?
‘Yes, although the percentage difference between RPI and CPI may be small, it will happen every year. Each time you lose a bit off your pension it is lost for ever.
‘By the time of the next general election, pensions rising by RPI could easily be 10 per cent higher than those going up by CPI. In twenty years it will be 20 per cent.
‘To illustrate the point, if this year’s difference between RPI and CPI (1.5 per cent) was replicated every year for the next 20 years, then the value of an APS pension for someone currently receiving £10,000 p.a. would only rise to £18,415 p.a. with CPI, compared to £24,583 p.a. with RPI.
‘That’s 25 per cent less, and amounts to a cash difference of £6,168 a year – a significant amount of money for a pensioner trying to make ends meet.
‘Is CPI fair?
‘No. As far as up-rating pensions is concerned, CPI is a swindle.
‘The pensions rule for annual pension increases is there so the spending power of your pension does not get eaten away by inflation.
‘CPI does not do that because it assumes that, as prices rise, you buy cheaper things. Over time you will not be able to afford the same as you did when you first started drawing your pension.
‘That is not how it was throughout your working life, it is not what you and BA contributed towards – a swindle.’
• The government’s replacement of the RPI inflation measure with the CPI on public sector pensions led to 750,000 teachers, lecturers and civil servants going on strike on 30th June.
Unison leader Dave Prentis has said he expects four million public sector workers to take strike action over the issue in the autumn.