Lufthansa plans to change pension system

Pensions will be linked to investment performance

Lufthansa plans to scrap its retirement and pension system by the end of 2013 and replace it with a less costly one. In the new system, payments to staff would be linked to investment performance.

However, any new system will first have to be approved by unions.

There is a trend for companies in Europe to cut pension costs by changing defined benefit pensions to defined contribution schemes more closely tied to returns on investment. Lufthansa’s final pension would depend on market performance.

Peter Gerber, board member of Lufthansa’s passenger division, says that costs are increasing due to low interest rates and rising life expectancy.

Reuters

[photo by Roland Fischer/Lufthansa]