From the BA Intranet:
British Airways has unveiled a proposal to clear the near £1 billion past deficit in the New Airways Pension Scheme (NAPS).
The airline has retained a final salary scheme and is proposing that staff work longer with slower pension growth and pensionable pay elements of future pay rises capped at inflation.
The airline says that if the proposals are accepted, it will make a payment of half a billion pounds into NAPS, which together with £350 million it will have paid by the end of the year, will clear the past deficit.
Chief executive Willie Walsh said: "This a shared solution that tackles the deficit while keeping many of the things that people have told us they value in their pension.
"We are not proposing any increase in staff contributions and the pension that people have already earned will be protected.
"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."
The proposed changes for future service are:
· Working longer
· Slower accrual (the speed at which a pension builds up)
· Inflation capped pensionable pay awards
· Reduced pension growth on retirement
· Shared impact of changes in life expectancy
Chief financial officer Keith Williams said: "When we set out to raise awareness of the deficit in the past few months, people told us they were concerned about the security of their pensions and that a shared solution was the right way forward.
"Our staff also said they wanted to keep a final salary scheme, pay the same amount each month into their pension and protect the pension they've already earned.
"Our proposal sets out to do all these things. We are keeping a final salary scheme while some other companies have abandoned theirs. We're also protecting current pensions with the changes only relevant to future service. And the amount people pay each month won't go up, unless they want it to."
There is a future provision that if people were to live longer than the current expectation, the pension costs would be shared.
The airline is putting forward one proposal but there is still choice available. Employees can choose to retire without working longer and take a smaller pension, save more money towards their pension outside NAPS or move to the airline's defined contribution pension.
The trade unions will be consulted on the changes and the airline will seek agreement from the pension trustees. For detailed information on the proposals, see the special in-depth site on the intranet.