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(N.B.: latest pensions reports at the bottom of the posts)

From Captain Mike Post (with a following article today from Professional Pensions website) :- "Dear all Judging by the number of emails, texts and calls that I have received since yesterday's announcement from BA Pensions, the proposed settlement of the Discretionary Increase dispute has been widely read. (Please forgive me if I take a long time to reply to individuals). "My apologies for the delay in responding on Mike's List (and this is only a holding response) but the proposed settlement arrived yesterday out of the blue and I have several other commitments including the celebration of my wife Frankie's birthday today! "The proposed settlement is subject to the blessing of the High Court but it is difficult to see how the Court would wish to void an agreement between the two parties. Although perhaps an order to BA to apologise to the Trustees and their advisors for the accusations of bad behaviour that BA's barrister made in the six-week long main hearing in 2016 might be in order. It will be remembered that the trial judge rejected all the accusations of bad Trustee behaviour that BA had made and described the APS Scheme Actuary, Michael Pardoe, as 'an actuary of outstanding ability who behaved entirely appropriately at every stage during a long and difficult process of deliberation'. "If you have not yet seen the announcement of the proposed settlement, it may be found in the "Other News" section of the APS section of the MyBAPension website: https://www.mybapension.com/aps/news/other-newsI will not attempt to better this description. There are one or two details that need clarification but in my opinion the current APS Trustee and their advisors have achieved a very good result for us. "The settlement is not perfect but once George Osborne had fecklessly announced that he was changing the index for uprating public sector pensions from the RPI to the CPI whilst disregarding the promises that had been made to British Airways pensioners, conflict was inevitable. It is dismaying that the battle to restore RPI (if approved!) has taken almost 9 years. It is a shame that the wording of the NAPS Trust Deed meant that NAPS beneficiaries were unable to argue to restore RPI to NAPS pensions, but it is a good result that the proposed settlement includes the payment by BA of £250 million to NAPS which would otherwise have gone to APS. "There are many people to thank - a task which I shall address in a subsequent posting - and it is a matter of deep regret that well over 6,000 APS beneficiaries have died since BA initiated the legal action. However the important point is that, subject to the Court's blessing, thanks to the restoration of RPI to APS pension increases, the purchasing power of APS pensions over potentially very long retirements has been substantially restored. "As Fraser Smart explained in his excellent interview with the BBC in 2011 , the restoration of " RPI to APS was 'worth fighting for!'

http://www.actuarialpost.co.uk/…/fraser-smart-talks-to-bbc-…

pension-reform-1343.htm

http://www.actuarialpost.co.uk/article/fraser-smart-talks-to-bbc-about-public-sector-pension-reform-...

----------------------------------------------------------------------------------- ...and from the Professional Pensions website:-

"..... Members of the Airways Pension Scheme (APS) are set to receive boosts to their pensions after long-running litigation between the scheme's trustees and British Airways (BA) has ended.

A settlement has been reached which will see the scheme gradually return to awarding increases to pensions in line with the Retail Prices Index (RPI).

Nearly six years after litigation began, BA and the APS trustees have agreed to end a court battle over the trustees' decision to award a 0.2% discretionary increase late in 2013.

The litigation had seen the trustees' move allowed in the High Court, but the Court of Appeal had reversed the judgment. A further appeal to the Supreme Court was scheduled for July.

The case stems from a government decision to move Pension Increase Review Orders (PIROs) from RPI to the Consumer Prices Index (CPI) in 2011, a move which affected the APS as it was formerly a public-sector scheme.

The settlement, if approved by a court later this year, will see backdated payments to pensioners for the 2013 to 2019 period in the form of a lump sum of up to 4.6% of pensions in payment in 2013, and adjusted for members whose payments began after that date.

A further ‘catch-up' discretionary increase of up to 1.7% will be paid for pensions in payment on 31 March 2019, and another 0.7% will be added from 8 April 2019 to account for some of the gap between the latest PIRO and RPI.

Payments will be adjusted depending on when pensions or guaranteed minimum pensions came into effect, and when the member left active service. Deferred members will receive similar increases.

BA and the trustees have also agreed an intention to award an increase of 75% of the gap between CPI and RPI in 2020, and then to move fully to RPI for 2021.

This will depend on meeting the terms of an undisclosed affordability test, and unilateral approval by a simple majority of trustees. Professional advice to the trustees outlined a "good reason" to believe the test will be met in every year from 2021, with the scheme currently in surplus.

As part of the agreement, BA will no longer be required to pay deficit recovery contributions (DRCs) or cash-sweep contributions to the scheme, effective as of 31 December 2018, with these only restarting if funding falls below 100% on a technical provisions basis - when increases would also be suspended.

Buy-in catalyst

Speaking to PP, BA Pensions chief executive Fraser Smart said the key reason behind the settlement was to "gain some certainty", and that discussions had been going on for some time.

In particular, the settlement was aided by the scheme's movements to de-risk, through removing a requirement to invest in equities, but mostly the record-breaking £4.4bn buy-in with L&G last year.

"The real catalyst was to get that buy-in transaction done and that unlocked the discussions on both sides," Smart explained.

The settlement is subject to court approval and, after that, the scheme will conclude both its overdue 2015 valuation, as well as the 2018 valuation, both expected within three months.

Now, the focus is on implementing the settlement and improving security of benefits for members, with the trustees expecting to be fully insured with all members eligible to draw their full benefits from 2028 - although this is not fixed.

"We'll see where the funding takes us," Smart added. "At that point, we expect to be in a very secure position. The more we can secure liabilities, the better. If that's a buy-in, then so be it, but that date is not set in stone."

The trustees will also provide a way to opt-out of the increases if this would cause members to breach enhanced or fixed tax protections, and will encourage members to let the scheme know if this may affect them.

"We want to make sure our members are looked after," Smart said. "We spent quite a bit of time thinking about those members that might have enhanced or fixed protection who might inadvertently trigger those limits.

"We are putting in place processes to encourage them to tell us if they have any protections that we're not already aware of so they're not inadvertently caught."

BA has set aside around £40m to pay for the discretionary increases if it is required. The settlement is expected to receive court approval during the summer.

The company's other scheme, the New Airways Pension Scheme, is also expected to now benefit from a £250m contingent payment set aside for APS if the scheme had been in deficit this year...."