Airline follows trend to offer employees a pension or cash
British Airways has announced the closure of its defined benefit pension scheme, saying it reached the decision following consultation with unions and employees.
The scheme, opened in 1984 but closed to new joiners since 2003, will shut down altogether next April. It is being closed in an effort to deal with a £2.8 billion (€3.2 billion) pension deficit.
The New Airways Pension Scheme and BA’s main UK defined contribution scheme will both be replaced with a flexible benefits scheme, which will let employees choose cash instead of a pension.
The IAG-owned airline said that the overall financial impact of the change would partly depend on which option members select.
Trend from pensions
The move follows a trend for large companies to shift away from defined pension schemes as costs to fund pensions rise, because people are living longer and investment returns on bonds are falling due to low interest rates, the Independent reports.
British Airways says its new scheme will “offer market-competitive arrangements”.