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Winning for our members on pensions

by John Moore Head of Industrial Relations

The long and winding road to a major court victory on pensions.

Defending our members’ rights and for the piloting profession is a vital part of what BALPA is about.

That is certainly the case when it comes to our long running campaign for the removal of the Pension Protection Fund (PPF) compensation cap and is why our recent legal victory is all the more important to us and our members.

BALPA begin its campaign back in 2012 When BMI and ex-Monarch members were left severely out of pocket when their pension schemes entered the PPF.

The PPF is a statutory body funded by a levy on employers who run DB pension schemes.  Its main aim is to protect members of a DB pension fund if their employer becomes insolvent. It is a thoroughly good thing, and it is important that it exists, especially right now when so many companies up and down the country are facing an unsure future.

The ‘compensation cap’ meant that there was a limit to the amount of pension any person in the scheme could receive. In plain terms, a large number of our pilots would not receive the pension they had expected, planned and saved for over many years. The cap was designed so as to ensure that executives could not manipulate entry into the PPF and still receive large pensions – but it was hitting professional workers too.

It has taken years of legal wrangling and we are proud to have committed time and resources to get the result we were working towards… the Court of Appeal rejected the Department for Work and Pensions (DWP) challenge to last year’s High Court decision (in BALPA’s favour), that the PPF compensation cap is unlawful on grounds of age discrimination. It means the cap must be removed and affected members will be entitled to receive 90% of their expected pension under their original DB scheme with no cap applied.

We have also now had confirmation that the DWP will not be appealing the result. It is an important victory for BALPA and great news for pilots, many of whom were expecting to lose more than 50% of their pension as a result of the PPF compensation cap.

It is great news for affected members like Andrew Lancefield:

This news also goes beyond just those pilots affected. The scrapping of the compensation cap will be good news in future for pilots who find their pensions in the PPF and in fact, for any high earners outside of aviation.

All pilots subject to the cap will now receive 90% of their expected scheme pension. We will be liaising with the PPF over the next few weeks to understand in more detail how and when compensation uplifts, arrears and other payments will be processed.

We are very pleased a large number of members will now see far more of the pension they worked hard for many years to earn and there is the knowledge now that the fund will do what it should… protect peoples’ pensions.