British Airways (BA) has decided not to follow the lead of other large employers and solve its huge pension deficit by closing its final-salary scheme to existing members.
The BA scheme has a deficit of £1.4bn, making it the biggest in the FTSE 100 in terms of market capitalisation.
Rentokil Initial and Co-Operative Group recently announced they were closing their final salary schemes, and experts said the moves would open the doors for other companies to follow suit.
But Willie Walsh, BA’s chief executive, appeared to rule out closure of the airline’s scheme yesterday, saying: “It does not feel like the right solution for us,” reports The Independent.
BA will put initial proposals for tackling the deficit to employees and pension fund trustees next month. Options range from forcing staff to increase their contributions to moving from a final salary to an average-salary arrangement and increasing retirement ages.
The scheme has 34,500 active members and contribution rates of 5.25% for ground staff and 6.5% for flying crew. BA doubled its annual contributions to £225m in 2003.