BAE reaches deal to cover £2bn black hole in UK pension fund

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The Independent Online

BAE Systems claimed to have settled the row over the £1.95bn shortfall in its pension fund but one of its unions said it still had to agree to the compromise solution announced yesterday.

The company, led by chairman Sir Dick Evans, had originally planned to share the pain evenly between itself and its workforce with the increased cost borne 50:50. But yesterday BAE said it had agreed to cover 60 per cent of the required increase in contributions.

BAE said that the proposal had been accepted by its pension fund trustees, who include employee representatives. Amicus, which represents around 20,000 of the company's 50,000 UK workforce, said the majority of its members had agreed the move.

But the Transport and General Workers' Union, which has been in the vanguard of threats to strike over the issue, said it had still to agree the changes.

The value of the company's main UK fund needs to be increased by 10.8 per cent. BAE said it has agreed to cover 6.5 per cent of that shortfall. The 55,000 members of the scheme have until mid-May to decide whether to remain with the scheme.

The fund, along with other final-salary pension schemes, has been hit hard by the collapse in equity markets over the past three years, forcing BAE to ask its members to increase contributions to make up for the shortfall.

Although Amicus has accepted the new deal, its national aerospace officer John Wall said he hoped the increase in contributions would only be a temporary measure until markets picked up again.