British Airways gold-plated pension scheme falls casualty to £3.7bn shortfall

 
Oliver Gill
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British Airways Full year 2005 results.
British Airways pension scheme has cost the airline billions since 2003 (Source: Getty)

British Airways is planning to shut its pension scheme after grappling to deal with a shortfall that has swelled to £3.7bn.

In short statement this afternoon, BA said it would consult on a range of changes to enable the airline to "invest in the customer experience".

The UK's main pilots union said the plans were "bitter disappointing"

BA said it has poured £3.5bn into the New Airways Pension Scheme (NAPS) since 2003 but not managed to get the deficit under control. It said it will pay £750m in pension contributions in 2017.

Today's proposals come as part of a consultation and follow an announcement in October last year that BA would reveal further details in due course.

BA's pension scheme is set to be the latest in a number of high profile casualties in recent months including those provided by British Telecom, Royal Mail and Tesco.

John Moore, the head of industrial relations at pilots union BALPA, said:

It is bitterly disappointing that BA is now seeking to close NAPS to future accrual and thereby remove a highly valued employment benefit.

“At the same time, we cannot ignore the significant funding problems identified by BA and will continue working with the airline to mitigate the impact of any changes and improve the DC [defined contribution] pension scheme.”

Read more: Unite pauses British Airways summer strikes to try and bring end to dispute

Around 17,000 BA staff are members of the NAPS final salary scheme. Some 20,000 employees are in the firm's defined contribution fund – which provides pension payouts based on investment, rather than guaranteed, returns.

BA is in the middle of a long-running legal spat with members of NAPS' predecessor, the Airways Pension Scheme (APS). The airline wants to limit the increases APS trustees can make to payouts, something that members are concerned could be a stalking horse for further changes.

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