British Airways’ new employee pension scheme should result in annual savings of £80 million ($112 million), its parent company International Airlines Group (IAG) said.
UK carrier British Airways (BA) closed its New Airways Pension Scheme (NAPS) to future accrual and its British Airways Retirement Plan (BARP) to future contributions from March 31. They have been replaced with a flexible benefits scheme, incorporating a new defined contribution pension scheme, called the British Airways Pension Plan (BAPP), which offers a choice of contribution rates and the ability to opt for cash instead of a pension, the company said.
The annual costs for BAPP are expected to be approximately £80 million lower than the equivalent NAPS and BARP costs in 2017.
BA CFO Steve Gunning said: “This is an important step in managing the risk in NAPS and ensuring the airline has an appropriate cost-base for the future. The new arrangements include a market-competitive defined contribution scheme and will stop the buildup of further liabilities and risk in NAPS. This will help to improve the security of existing benefits.”
IAG said in December it would close its existing programs and launch a new scheme, in a bid to address the rising cost of future pension provision and the volatility of the NAPS scheme, which dates to 1984 and had a deficit of £2.8 billion as of its last valuation in March 2015.
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