British Airways Changes Pension Scheme For New Employees
Edited Press Release
LONDON -(Dow Jones)- British Airways (NYSE: BAB - News) is to change the pension provision it makes for future new U.K. employees, moving from a defined benefit final salary basis to a defined contribution basis from autumn 2002.
The decision will not affect the pension benefits of the 65,000 members of NAPS, the New Airways Pension Scheme, or the 36,000 members of APS, the original Airways Pension Scheme, which was available to employees who joined before 1984.
The decision follows a thorough internal review of the company's U.K. pension arrangements taking into account the changing competitive environment, new accounting rules (FRS17), volatile markets and rising life expectancy.
Under FRS17, APS/NAPS taken together generate a company accounting shortfall of GBP394 million as at March 31, 2002 .
APS/NAPS have investments together valued at nearly GBP10 billion. Both schemes meet the statutory Minimum Funding Requirement (MFR).
The FRS17 valuation does not have any impact on cash flow.
These schemes have proven to be inadequate due to low funding levels on the part of the employer. The one at CX for example (B-Scale Provident Fund) has been shown by many actuaries to be under funded, leading to lower than average benefits.
Any idea of the contribution level?