Unions call on BA to impose pension income cap

Top managers and senior pilots at British Airways should take a massive cut in retirement benefits as part of attempts to tackle its pensions black hole, according to representatives of lower-paid workers.

The GMB general union has told the company no one should enjoy a pension of higher than £50,000 a year, a cap which could affect thousands of staff who qualify for higher rates and those already retired.

Ed Blissett, the national officer of the GMB, which represents ground staff, said some senior managers had much higher benefits than £50,000, including Sir Rod Eddington who enjoys a £250,000-a-year pension after a five-year stint as chief executive.

Mr Blissett made the proposal at Thursday's meeting between the union and management, which was called after the airline disclosed that its pension-fund deficit had doubled to £2.1bn.

Mr Blissett said: "There may be legal difficulties in imposing a cap on pensions, but if the crisis is as grave as BA says - and I think that is debatable - then perhaps people being paid these substantial sums should voluntarily take a cut. I don't think £50,000 a year is a poverty income. I think the people on £130,000 a year or more should be taking a bigger hit than our members, some of whom are paid £16,000 a year."

The airline is due to respond to Mr Blissett's suggestion at a meeting scheduled for Wednesday amid threats of industrial action by employees' representatives.

Unions were angered by the airline's proposals to tackle the deficit, which included a £500m one-off payment by the company into the so-called New Airways Pension Scheme, which is dependent on the union accepting a package of cuts.

Other suggested that changes were raising the retirement age for cabin crew from 55 to 65, and for the 2,500 pilots from 55 to 60. Pension increases on retirement for all staff would be capped at 2.5 per cent, and accrual rates would be reduced. Mr Blissett said a strike ballot among members of GMB would be inevitable if BA repeated its hard- line stance when the negotiations resume.

The airline is desperate to avoid industrial action this autumn after disruption from new security arrangements in August caused more than 1,000 flights to be cancelled and deterred many travellers. The tougher security regime has cost the airline £40m this year.

A spokeswoman for BA said the company was aware of the GMB's proposal and would be responding on Wednesday as part of "an ongoing consultation process".

Until the pension issue is settled, BA cannot press on with a multibillion-pound fleet replacement programme or resume dividend payments to shareholders.

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