In an effort to slow a “significant and growing funding deficit,” British Airways announced proposals to close its main pension, a defined benefit plan known as the New Airways Pension Scheme (NAPS).
While the benefits members had already earned would be protected, employees would no longer continue paying into the plan if the motion passes. The proposals were part of a consultation the airline expects to commence “in the coming weeks.”
According to the BBC, British Airways has put £3.5billion into NAPS since 2003, when it closed to new members, but as of March, the pension was facing a £3.7 billion deficit—the largest of all UK company pension deficits relative to a company’s overall financial value, according to the airline.
“In 2017 alone, the airline will pay £750m in pension contributions and has already committed to provide between £300m and £450m a year until 2027 to address the NAPS deficit,” the airline told the BBC. “If NAPS remained open to future accrual, the cost to the company of providing future benefits to NAPS members could rise to 45% of individuals’ pensionable pay in 2018—more than four times the typical employer contribution of UK airlines.”
NAPS contains roughly 17,000 members. British Airlines’ defined-contribution pension plan, BARP, holds more than 20,000 members.
Unite and GMB issued a joint statement, expressing “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,” Unite and GMB said in a joint statement. “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.”
Tags: British Airways, Defined benefit (db) pension plans, New Airways Pension Scheme, Pension