British Airways has announced that it will be shutting its defined benefit pension scheme in April next year, in a bid to tackle a crippling £2.8bn pension deficit.
The airline, owned by International Airlines Group, said that it would replace its New Airways Pension Scheme (NAPS) as well as its main UK defined contribution scheme with a flexible benefits scheme, which will allow members to opt for cash instead of a pension.
British Airways said that it had reached the decision to make the changes following consultation with its trade unions and employees. It said that the overall financial impact of the transition would depend, in part, on the transition arrangements that members select.
The airline is the latest in a string of companies to transition away from defined benefit pension schemes. Costs to fund pensions have risen sharply in recent years as a result of people live longer and investment returns on bonds falling as a result of low interest rates.
Royal Mail, BT and Tata Steel UK are just three of the companies that have closed their schemes in recent months.
British Airways on Friday said that its new scheme would “offer market-competitive arrangements”.
Its final salary scheme, opened back in 1984, has already been closed to new joiners since 2003.
