BA PENSIONS CRISIS – work longer or pay more, workers told


BRITISH Airways workers are being threatened again that they will either have to work longer or pay more to maintain the value of their pensions.

It was announced yesterday that the two BA pension funds sank further into deficit last year, with the total shortfall now amounting to £1.7 billion.

BA sponsors two pension schemes – the Airways Pension Scheme, which dates from before the airline’s privatisation, and the New Airways Pension Scheme (NAPS).

The company announced yesterday that the position of both funds deteriorated during the 12 months to 31 March (their financial year).

The worsening funding position comes just two years after the schemes reported a £2.1 billion deficit, which BA described at the time as a ‘black hole’ and a threat to the existence of the airline.

Then, early in 2007, the unions and the company negotiated a deal under which staff would either work for longer, or pay higher pension contributions.

In return, BA agreed to pay £850 million into the fund as a special deficit payment, and to make further contributions of £131 million in each year to 2016.

Both management and the union leaderships claimed this would protect the pensions for the future.

Now, barely one year on, following a mini-valuation, the scheme has cut its estimate for how much its investments are likely to earn in the future – the ‘black hole’ has reappeared.

‘Clearly we haven’t made any progress over the year as we would have expected as against the 10-year recovery plan,’ said John Birch, managing director of BA pensions yesterday.

Next year the BA scheme will have another major valuation which will increase its underlying long-term funding requirements.

‘It’s a possibility we may have to ask the company to make a higher contribution, but it is too early to say,’ said Birch.

The 2007 deal covered the 34,000 BA flying crew and ground staff who were active members of NAPS.

The scheme was closed to new joiners in 2003. Nearly all final salary pension schemes run by companies are in the same boat.

Meanwhile, BA has launched a jobs onslaught and mass sackings programme, announcing that more than 1,000 managers face losing their jobs by the end of the year.

Chief Executive William Walsh held a meeting with mid-to-top-level staff on Tuesday to announce the job cuts.

Approximately 1,400 workers earning upwards of £40,000 are being made redundant before the end of the year.

A BA spokesman said: ‘We are in the worst trading environment the industry has ever seen.

‘Like all airlines, we are having to identify areas where we can reduce costs.

‘It has been decided to give managers and senior managers the opportunity to apply for voluntary redundancy.’

• AA/Saga have proposed to cut the pension benefits paid to AA workers who retire early.

Paul Maloney, National Officer of the GMB trade union which represents the majority of unionised staff within the AA/Saga, said: ‘GMB condemns outright AA/Saga for their actions against their own staff.

‘They continue to rue the day that the multi-millionaire elite who run the private equity industry took over these companies and wreaked havoc on numbers employed, pay, terms and conditions, and now pension benefits.

‘It is rich for AA/Saga, who live off pensioners’ business, to on the one hand demonstrate on behalf of pensioners against the government, and on the other hand, cut a valuable pension benefit from their own staff.’