Unions reject better BA pensions deal

Talks to resolve British Airways' £2.1bn pension deficit are to continue after unions last night rejected an offer from the company to limit the increase in the retirement age to 60 in return for higher staff contributions.

A statement from the pilots' union, Balpa, the Transport and General Workers Union, and Amicus said that "substantial differences" remained between the sides, while Jim McAuslan, the general secretary of Balpa, said BA and the union were "a way apart".

After a full day of talks, BA said it was prepared to drop its proposal that the retirement age of pilots and cabin crew be raised from 55 to 65, and instead proposed a normal pensionable age of 60. The retirement age of ground staff was to rise to 65.

In return, BA proposed that employee pension contributions increase from 5.15 per cent to 10 per cent of salary for ground staff and from 6.5 per cent to 11.25 per cent for air crew. The company also offered to increase its contributions from £235m to £272m.

Keith Williams, BA's finance director, said: "We recognise that normal retirement age was a sticking point and we have put forward an option that allows staff to retire at 60. Staff can still choose not to pay extra, but it will mean working longer to get the same pension."

Mr McAuslan responded by saying: "We will study BA's proposals but we are still a way apart. We could have had a deal today but BA didn't move far enough. If BA are not careful they will snatch defeat from the jaws of victory. Balpa remains resolute."

The talks are expected to resume next week. BA's chief executive, Willie Walsh, has said that he is determined to resolve the pension deficit this year.