BAE Systems has agreed a plan with its unions to wipe out its huge pension fund deficit.
The aerospace and weapons company will pay in an extra £1.1bn over the next 10 years in cash and assets to help eliminate the deficit, which stood at £3.1bn at the end of 2005.
Both the company and its staff are also paying higher regular contributions.
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Although the scheme will provide reduced benefits in the future it will be kept open for current members.
To save £770m, other changes have been agreed:
- A formula will be used to reduce the expected pension if longevity improves further, but
- Staff will be allowed to work beyond 65 to offset the reduction
- Pension calculations will be made on the average pay earned in the final three years at work, not just the final year
- Ill-health and early retirement pensions will be reduced.
