British Airways To Close Two Pension Schemes

December 8, 2017

IAG unit British Airways announced it is closing its defined benefit pension scheme next year and replacing it with a new defined contribution scheme.

BA said in a statement the changes “are aimed at addressing the rising cost of future pension provision,” with the NAPS defined benefit scheme operating with a deficit of GBP£2.8 billion (USD$3.75 billion) at its last valuation in March 2015.

The defined benefit scheme, the New Airways Pension Scheme (NAPS), has about 47 percent of the airline's active UK employees. It was closed to new participants in 2003.

NAPS was replaced by a defined contribution scheme, the British Airways Retirement Plan. BARP, which has 52 percent of BA’s UK employees in it, will also close next year.

NAPS and BARP will be replaced in April 2018 by a “flexible benefits scheme incorporating a new defined contribution pension scheme,” the airline said “following consultation with its trade unions and employees.”

Active NAPS members will be offered a choice of transition arrangements including a cash lump sum, additional company pension contributions or additional pension benefits in NAPS prior to its closure.

The overall financial impact on British Airways will depend, in part, on the transition arrangements members select.

(Airwise)