One of the UK largest pension funds, USS, announced it needs to increase employees and employers combined contribution from 30% to 56% of the payroll. This should be a wakeup call for all employees to review the way they are saving for retirement. The airline industry will be next.
British Airways has deferred £450m of pension payments as Covid cuts flights. Since September last year, BA has not made any pension contribution into the New Airways Pension Scheme (NAPS). They have agreed with NAPS to postpone the payments in order to preserve £450m in cash on their books to pay for operating expenses. BA still has to plug a £2.4bn hole in the New Airways Pension Scheme, which was discovered during a valuation in 2018. "BA laid off more than 10,000 staff last year (2020) and placed many of its remaining employees on less generous contracts as it retrenched for what managers insisted was a fight for survival." (The guardian, click here to read more). Will BA resume their pension contribution payments in September 2021, we shall see. For aircrew, the airline companies usually have their own pension funds but for yacht crew there are none.
When you contribute to your airline pension plan, they either use pension fund managers like USS or do it themselves if they have in-house expertise. In both cases, the funds are not as protected as you may think.
Over the last decade we saw many airline companies going through pension crisis whether it is due to sales or fund deficit. Such examples are: BMI and Monarch Airlines. “At least 30 of the BMI pensioners and 13 Monarch members will lose more than 50% of their expected scheme pension”. (Source: Hansard) James Connors, a pilot with Monarch, will lose 60% of his expected pension in their Pension Protection Plan. Instead of the expected £69,000 he is to receive £26,500. He is not the only one. Other pilots who have been entrusting their funds with their company pension schemes, find themselves through no fault of their own, with a sizable chunk of their pension entitlement snatched away. These pilots' lives are ruined for the next 30 years, with every year being less employable. James Connors and Monarch Airlines pension fiasco dates back to 2015, but history has a tendency to repeat itself, especially with COVID being a ticking time bomb. The aviation consultancy CAPA predicted that “most airlines in the world will be bankrupt” click here for more info. One of the largest airlines to file for bankruptcy was Virgin Atlantic, which is the largest aviation to collapse in Australian history. Other airlines who have falled by the wayside include Flybe, Miami Air International, Air Mauritius, SunExpress Deutschland, Czech Airlines, and Norwegian. Flybe employees face a £80m hole in their pension scheme with no protection for the workers at the collapsed airline. Your personal Plan B is essential if you do not wish to risk receiving £25,000 per year in your retirement. Placing your savings is your opportunity for financial stability. Protect yourself.
Yorumlar