British Airways Raises Retirement Age
March 24 2006 - British Airways is proposing to change its
New Airways Pension Scheme (NAPS) in order to clear
a £1 billion past service actuarial deficit. Despite the name, NAPS has been closed
to new members sice 2003. A newer - defined contribution - scheme, British Airways' Retirement Plan (BARP) has been available since then to recent joiners,
including chief executive Willie Walsh who joined in May 2005.
The New Airways Pension Scheme (NAPS) NAPS has 33,794 active members, 20,269 deferred
and 15,185 pensioners. BA intends to keep a final salary pension scheme with no changes
to pension benefits already earned and no increase in staff contribution rates. But, under the
new proposals, there will be changes to members' benefits relating to future service.
Key changes for future service are:
- Normal retirement age for cabin crew raised from 55 to 60 initially and 65 after 5 years.
- Normal retirement age for pilots raised from 55 to 60 - 65 if countries such as France and the USA remove restrictions on older pilots overflying them.
- Slower accrual rate
- Pensionable pay increases no more than inflation
- Pension increases on retirement capped at 2.5 per cent each year
- Company and staff to share impact of changes in life expectancy
Willie Walsh, chief executive, said: "This is a solution that will provide competitive, affordable pensions for the future. These changes are necessary to clear the past deficit and to contain the amount of future funding needed. It means working longer to get a similar annual pension, but one that is more secure. This should address the pension problem at British Airways once and for all.
"After the changes are accepted, the airline will make a payment of £500 million into the fund. This is on top of the £350 million the company will have paid towards the past deficit by December 2006."
Mr Walsh added: "The changes to members' future benefits will reduce the anticipated deficit by £450 million. We will also be able to make contributions for future service we can afford.
"This package of measures is vital if we are to achieve a competitive cost base, deliver a 10 per cent operating margin, be fit for growth and invest in our future."