British Airways is to consult on plans to close to future accrual the larger of its two defined benefit (DB) schemes, citing the increasing cost to the company of providing future benefits if the scheme were to remain open.
BA blamed low interest rates and rising life expectancy for the £3.5bn deficit in the scheme’s deficit, and as a result was said to be looking to launch a new benefit scheme that would not only absorb the Naps members but would also take on the 20,000 members of its less generous contribution scheme, Barp.
British Airways said: “In 2017 alone the airline will pay £750 million in pension contributions and has already committed to provide between £300 million and £450 million a year till 2027 to address the Naps deficit”.
They said the proposals which will “improve benefits for the majority of United Kingdom colleagues” are part of a consultation that would get under way “in the coming weeks”.
The company said this was the largest of all United Kingdom company pension deficits relative to the company’s overall financial value.
Unions are demanding urgent talks over plans by British Airways to make changes to its pension scheme.
“The proposed changes would help protect the pension benefits NAPS members have already earned and improve the company’s ability to invest in the customer experience”, it said.
Unions blasted the move and expressed their “dismay and disappointment” at proposals from the British flag carrier to shut the New Airways Pension Scheme (NAPS) to future contributions from its existing 17,000 members. In a joint statement, Unite and GMB called on BA to engage in further talks.
They said “thousands of loyal and long-serving staff” now faced ‘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”.
The unions called for urgent talks to discuss the impact of the announcement and, if a solution can not be found “the consequences the airline might face”.
“The ABAP is deeply disappointed that BA’s owner, International Airlines Group [IAG], should seek to close NAPS to future accrual”, it said in a statement.