British Airways is consulting the members of one of its defined benefit pension schemes about making good a deficit of more than £1bn.
The airline is now looking at revising the terms of its New Airways Pension Scheme (NAPs), which was set up in 1984 and closed to new members in 2003. Last year BA increased its company contribution to NAPs to £225m.
A company spokeswoman said: “We can’t afford to continue to pay that and take the risk of a further significant cost increase because we believe that the deficit is getting worse.”
Members may be called upon to increase contributions in the future. There has also been speculation that members could be given cash incentives to opt out of the scheme, but this has been denied by the carrier.
The BA spokeswoman said: “We are in the process of sending out a letter and leaflet explaining what the problem is and encouraging staff to attend discussion briefings to explore all the issues.
“We don’t have any proposals as such at the moment. This is a communication exercise. We want to raise the level of understanding among 34,000 NAPs members and to share the problem and to find a way to tackle it going forward.”
The legal duty to consult employees about changes to defined benefits schemes, under the Pensions Act 2004, has yet to come into force. But BA has decided to consult members as a matter of best practice and out of a need to attend to the deficit.