Improved Benefits for Pensioners
Whilst our over-riding objective is the security of the fund we also seek improvements to the scheme when it is appropriate to do so. In 1999 the then Personnel Director invited ROPA to submit a "wish list" of the benefit improvements for pensioners, which we would like to be introduced. We submitted the following list and asked for an actuarial assessment of the cost of each item. We also proposed that, if the 31.12.1998 Actuarial Review indicated a funding surplus, there should be a proportionate allocation to pensioners. The list was :-
- Abolition of the National Insurance Modifier (Crown Service Section).
- Provision of normal scheme pension increases on the whole pension rather than just the excess over Guaranteed Minimum Pension once pensioners reach State Pension Age.
- Making reckonable the non-reckonable service of those ex-Civil Servants who had service under the age of 18 prior to 1972.
- Making reckonable the non-reckonable service of BMARC Section members who had service under the age of 20.
- Provide an additional increase to the 2000 pension RPI increase. · Provide a one-off bonus payment from any funding surplus.
- Calculate 1984 Section pensionable pay without the deduction of LEL.
- Removing the 5% pension increase cap on RPI increases (1984 Section).
We made it clear that we would prefer improvements that applied to all three sections of the RO Scheme.
Following our submission of this list, a surplus funding of £32million was revealed but the Company proposed and the Trustees agreed that it should be used to reduce the rates of employer and employee contributions into the Fund. Following our protests pensioners were eventually given the first ever improvement to pensions in payment, but the improvement (the abolition of the National Insurance Modifier) only applied to Crown Service Section members with service between 1949 and1980. We asked about the Actuary's assessment of the cost of this change and were dismayed to find that the trustees had not considered it necessary to seek his advice. In other words the cost was minimal. (We were even more dismayed that the NIMOD adjustment was not made fully retrospective, as we had been led to believe.)
Since 2003 the Fund has been in deficit and significant improvements to benefits are not on the agenda. Nevertheless we shall press for changes when we can. Indeed, only recently we asked that when a pensioner dies his/her pension should continue to be paid in full to the dependants for a period rather than it being reduced immediately. We shall also seek any improvements that have been conceded to members of the other two groups on the Committee, the BAe Main and the BAe 2000 Plan Scheme members.