SaveOurPensions

bmi pensions

About this campaign

BALPA supports the bmi pensions action group (BPAG). We do so in the interest of ethics, fairness and justice.

The BPAG has been set up to secure justice following the decision of the UK Pension Regulator to assess the bmi pension scheme for entry into the Pension Protection Fund (PPF) – a move that will mean substantial cuts in pensions for people who have conscientiously paid contributions in the expectation of a reasonable standard of living for them and their dependents in retirement.

News of this came as a complete shock. When the possible sale of bmi first arose in Autumn 2011 BALPA sought assurances, and we got reassuring noises from Lufthansa (bmi’s owner) that there was nothing to worry about and the UK Pension Regulator saying they had powers to hold companies to account (click here). Members of the scheme received no communications from December 2011 (when Lufthansa said they were going to retain the pension obligation) until a letter the day before the completion of the sale which said the scheme was to be assessed for entry into the PPF.

And this bmi pension debacle reaches every corner of bmi; existing pensioners and those still working, deferred pensioners, widows and orphans; relatively well paid and lower paid; those in a union and those not.  Everyone will suffer and BALPA has made its expertise and resources available to support BPAG and to give those whose pensions and associated benefits are to be cut, a voice.

And this not only affects bmi employees and pensioners. As reported in the Sunday Times “for the first time a large solvent company has been allowed to dump liabilities into the Pension Protection Fund (PPF) and walk away”.  Where Lufthansa (the owners of bmi) has trod, others may try to follow. All pension funds will suffer, as all are expected to fund the PPF by way of a levy and yet, in this case, will be required to do so because of the actions of a blue chip company.

This is not right. As independent pension consultant John Ralfe said in a Sunday Times interview: “There is a stonking big company (Lufthansa) standing behind this. The Regulator has very strong powers that it appears to choose not to use. It’s an outrageous situation.”

Campaign Objectives

1. To provide transparency, independent scrutiny and accountability:

a. the publication of the assumptions used to value the bmi pension scheme by Lufthansa and the Trustees on the one hand and the UK Pension Regulator on the other

b. the publication of the UK Pension Regulator’s evaluation of its ability to use its moral hazard powers including its assessment of whether Lufthansa benefited from its ownership of bmi

2. For Lufthansa to provide a legally binding guarantee to fund any deficit that emerges, should its original proposal of £10m pa over 25 years be insufficient to fund the Scheme’s liabilities with the object of avoiding entry of the scheme into the Pension Protection Fund

3. For the UK Pension Regulator to reconsider the use of its moral hazard powers if it can be demonstrated that Lufthansa benefited from its ownership of bmi

4. That the UK Pension Regulator’s powers be strengthened to ensure this kind of event cannot be repeated i.e. two solvent companies off-loading the pension scheme of a subsidiary of the transferor into the Pension Protection Fund

5. That  the cap for Pension Protection Fund compensation be increased, to remove its impact on professional employees

6. That Pension Protection Fund compensation for widows, widowers, partners and dependants be as provided for in scheme rules

7. That no tax charge be incurred by a scheme member on compensation paid by an employer in addition to Pension Protection Fund compensation; where such compensation provides for a pension no greater than that which the member would have received had their scheme not entered the Pension Protection Fund

What we have been doing

In support of the BPAG BALPA has;

1. Engaged a top legal firm to pressure test the decisions of the Regulator.

2. Held a meeting with the Regulator. We are not at liberty to divulge the contents of that meeting, yet.

3. Written to Lufthansa who has expressed surprise that their proposed agreement was rejected by the UK Authorities; but have done nothing to improve the position so as to address the Regulator’s concerns.

4. Written to the Pension Minister seeking a meeting (click here). He has not taken up the offer arguing it is for the Regulator to act (click here)

5. Written to the Dame Anne Begg who chairs the Work and Pensions Select Committee. Dame Anne has said she will raise the matter with Bill Galvin (the Regulator) and Alan Rubenstein (CEO of the PPF)

6. Sought support from the TUC to make the current plight of bmi employees and pensioners a priority and to highlight the way this could affect all pension funds.

7. Written to BA who have bought bmi, but have managed to side-step its pension liability.

8. Engaged actuarial support to advise on the £84 million “top up” proposed by Lufthansa, which is wholly inadequate.

What you can do

BALPA is organising a lobby of parliament on 27th June. If you would like to be part of it, please write to your MP (http://www.writetothem.com/) seeking a meeting between 9 and 4 on 27th. A draft letter can be found here. If you get an appointment let richardtoomer@balpa.org know and we can send details of where to meet and what to do. Please click here for an FAQ document which provides more information about the event.

What next

Our focus is on exploring all legal avenues and on keeping this high on the agenda of Lufthansa, the Regulator and Politicians, on making ourselves a thorn in their sides. We, certainly, have no plans to retire and walk away.