British Airways (Pensions Uprating)

Jim Shannon Excerpts

Monday 14th September 2015 Commons Chamber

[Kate Green]

I am grateful to the right hon. Lady for her intervention and I hope to do justice to the concerns of her constituents, my constituents and indeed, as is very evident from the turnout for this debate, those of right hon. and hon. Members from right across the House. I had intended to mention a number of the hon. Members who have approached me about this evening’s debate, but I can see that so many are interested and so I will curtail that part of my speech.

As I have indicated, on 31 March 2014 there were 95,486 pensioners in two separate BA pension schemes—28,144 in APS and 67,342 in NAPS. The matter before us tonight therefore affects a substantial number of people, some on very modest pensions—the average pension in APS is about £14,000 per annum and in NAPS it is about £12,000 per annum—and has what Captain Post has described as a “complex history”, going back to 1948, when APS was established. That scheme contained several unique features, including a unilateral trustee power of amendment and a no-worsening clause. Six trustees were appointed by the employer and six were elected by the members. Amendments required two thirds of trustees to ratify them; employer approval was not required.

In 1973, in return for substantial increases in contributions, members were invited to transfer to APS part 6 to enjoy unlimited inflation protection. In 1984, APS closed to new entrants, pending privatisation of BA, and NAPS was established.

[Jim Shannon (Strangford) (DUP)]

The interest here in the House gives an indication of the interest among our constituents, too. Does the hon. Lady agree that given BA’s financial position with its pension scheme, with liabilities of £29.2 billion and assets of £29.3 billion, a move to de-risking would have made more sense and may have provided a greater surplus for the company and for the pension?

[Kate Green]

The hon. Gentleman is absolutely right, and I shall be developing that point further in my speech.

As I say, in 1984, pending privatisation, APS was closed and NAPS was established. BA went to considerable trouble at that time to inform existing APS pensioners of their options. I have here a copy of a staff newsletter from January 1984, which my constituent Mr Jones, an APS pensioner, has given to me. The newsletter, which includes a personal statement from Colin Marshall, then chief executive of BA, describes the details of the new scheme compared with the existing APS. It explains that APS pensioners can either choose to join NAPS, and receive a cash payment or extra pensionable years if they choose to do so, or to remain in the existing scheme. It states that the two schemes will be independent of one another, will not subsidise one another and will each be governed by their own scheme rules. It then describes the differences between the two schemes in relation to contribution rates, pension age, pensionable pay and, crucially for this debate, index linking.