BA to close pensions black hole four years early
BA has paid more than expected towards paying down its deficit.
A multibillion-pound hole in a British Airways pension scheme will be filled four years earlier than previously thought.
The flag carrier said it had been paying £450 million a year since 2015, more than expected, towards reducing the deficit.
It now predicts the £2.4 billion deficit in its pensions budget will vanish by March 2023, compared to the past 2027 target.
The higher-than-expected amount came after the company held enough cash to trigger an additional £150 million payment each year.
It came on top of the £300 million minimum that the company had committed to reducing its deficit by every year.
BA had long been struggling to pay down the big hole in its pension pot. Despite contributing £3.5 billion since 2003, the deficit had grown, it said in 2017.
Later that year it reached a deal with unions to close down the New Airways Pension Scheme, moving its employees onto a new fund. The Naps was a final salary plan, which allowed guarantees retirees are paid a proportion of what they were paid in the year before they retired.
Unions were not happy about the ending of Naps, which is less generous than newer schemes, but reached a deal with BA anyway.
It applies to the company’s pension scheme for employees who joined BA after 1984, those who worked before that date have their money in a separate pot.
Earlier this year, BA faced strikes from pilot members of the union Balpa, forcing it to cancel hundreds of flights in early September.
Pilots walked out from the flag carrier for the first time over a pay dispute with management.