British Airways announces closure of defined benefit pension scheme

The airline reached the decision to make the changes following consultation with trade unions and employees

Josie Cox
Business Editor
Friday 08 December 2017 09:20
Comments
The airline’s final salary scheme, opened back in 1984, has been closed to new joiners since 2003
The airline’s final salary scheme, opened back in 1984, has been closed to new joiners since 2003

British Airways has announced that it will be shutting its defined benefit pension scheme in April next year, in a bid to tackle a crippling £2.8bn pension deficit.

The airline, owned by International Airlines Group, said that it would replace its New Airways Pension Scheme as well as its main UK defined contribution scheme with a flexible benefits scheme, which will allow members to opt for cash instead of a pension.

British Airways said that it had reached the decision to make the changes following consultation with trade unions and employees. It said that the overall financial impact of the transition would depend, in part, on the transition arrangements that members select.

The airline is the latest in a string of companies to transition away from defined benefit pension schemes. Costs to fund pensions have risen sharply in recent years as a result of people living longer and investment returns on bonds falling as a result of low interest rates.

Royal Mail, BT and Tata Steel UK are just three of the companies that have closed their schemes in recent months.

British Airways on Friday said that its new scheme would “offer market-competitive arrangements”.

Its final salary scheme, opened back in 1984, has already been closed to new joiners since 2003.

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Please enter a valid email
Please enter a valid email
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Please enter your first name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
Please enter your last name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
You must be over 18 years old to register
You must be over 18 years old to register
Opt-out-policy
You can opt-out at any time by signing in to your account to manage your preferences. Each email has a link to unsubscribe.

By clicking ‘Create my account’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Join our new commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in