British Airways has announced proposals that it plans to close its main defined-benefit pension scheme in a bid to address a ‘significant and growing’ fund deficit.
The airline said that the proposed changes would help protect the pension benefits members have already earned and that it would improve the company’s ability to invest in the customer experience.
They said the proposals which will ‘improve benefits for the majority of UK colleagues’ are part of a consultation that would get under way ‘in the coming weeks’.
In a statement BA said: “Since 2003, the airline has pumped £3.5bn into NAPS, but the deficit, resulting from record low interest rates and increased life expectancy, had risen to £3.7bn by March this year.
“It is the largest of all UK company pension deficits relative to the company’s overall financial value.
“In 2017 alone, the airline will pay £750m in pension contributions and has already committed to provide between £300m and £450m a year till 2027 to address the NAPS deficit.
“If NAPS remained open to future accrual, the cost to the company of providing future benefits to NAPS members could rise to 45% of individual’s pensionable pay in 2018 – more than four times the typical employer contribution of UK airlines.”
However the proposal has angered unions have fought ti save the scheme. Unite and GMB unions said the changes will mean that loyal and long serving staff will face uncertainty in their retirement.
The Unite and GMB unions said in response: “On behalf of our members and in the strongest possible terms, both our dismay and bitter disappointment at the news that British Airways has announced its intention to close its main pension scheme.
“Thousands of loyal and long-serving staff, who have helped build British Airways into a world class flag carrier for this country and one of the most recognisable global brands, now face uncertainty in their retirement.
“Our team of financial analysts has worked tirelessly with the airline over the last few months to explore ways to keep the pension scheme open and secure it for the future.
“This announcement sadly confirms that our advice has gone unheeded and that we have been unable to convince British Airways that keeping the scheme open is the right thing to do, for both the company and its employees.”