British Airways has made a final offer to staff to clear its £2.1bn pension deficit over the ten years.
The proposals will be put by BA’s four unions TGWU, GMB, Amicus and Balpa to members of the final salary New Airways Pensions Scheme over the next few weeks. The scheme which as 33,794 active members was closed to new members in 2003.
Under the proposals there will be a normal retirement age of 65 years with a contribution rate of 5.25% and the ability for employees to pay a higher contribution rate of 8.5% to retire at 60 years. Staff can still elect to retire earlier than the normal retirement age but with a reduced pension.
Staff will also be given the option of a normal retirement age of 55 years with a contribution rate of 9% on top of the cost of retiring at 60 years.
Future pensionable pay rises will be capped to inflation and pension growth in retirement (LPI) remains at 5%.
BA has already said it will make a one-off contribution of £800m and up to £150m more in contributions over the next three years subject to financial targets.
Together with the one-off employee saving of £400m and changes to future benefits, the £2bn deficit will be more than halved to £0.9bn. The airline claims that its annual contributions for the next ten years of £280m, up from £272m in November last year, should clear the deficit.
Willie Walsh, British Airways chief executive said: “We have come a long way with our staff, trustees and trade unions on this issue. We have worked together and have now concluded our discussions on one of the biggest challenges facing the airline. We can now move forward on our plans for fleet renewal and replacement.”