BA 'unable to close final salary fund'

By KARL WEST
Updated:

British Airways is not able to close its final salary pension scheme because of an arcane postwar agreement that means the airline cannot cut pay or pensions, experts say.

Former government pensions adviser Dr Ros Altmann believes this little-known pact, called the 1948 Redeployment Agreement, goes a long way towards explaining why BA hasn't already shut its retirement savings scheme to existing members.

Around 30 companies have this year given their generous defined benefit pensions the chop, including big guns Barclays and BP. But the flag carrier has delayed taking decisive action.

BRITISH AIRWAYS

Union Unite is still threatening to ballot members for strike action despite having a previous vote overturned by the High Court this week.


Dr Altmann believes the 1948 agreement could also explain why BA chief Willie Walsh is keen to shift staff on to new contracts, which are not covered by the current rules.

These new contracts have enraged BA's cabin crew union Unite, which is still threatening to ballot members for strike action despite having a previous vote overturned by the High Court this week.

The Redeployment Agreement has been a source of huge conflict between the airline and the union in the current stand off. One letter, dated October 27, sent by Unite national officer Steve Turner to BA negotiator Tony McCarthy, highlights this.

Turner said: 'Recent communications from Bill Francis (head of inflight customer experience at BA) in particular have explicitly stated that new redeployment arrangements have been agreed with the trade union national officers.

'This is not true, you know it is not true and I expect you to put the record straight immediately. As you are very well aware, the national officers have no agreement with you on changes to the British Airways Redeployment Agreement.'

BA this week revealed the combined deficit of its two final salary pension schemes - Airways Pension Scheme (APS) and New Airways Pension Scheme (NAPS) - has ballooned to £3.7bn.

The loss-making carrier has stressed it has no more cash to pump into the scheme in order to reduce that shortfall.

Pensions experts, like Dr Altmann, believe BA has little choice but to close the scheme to all members and shunt workers into a less generous defined contribution scheme.

BA (down 2.1p at 190.1p) declined to comment on the agreement, saying only that it is in talks with trustees, unions and staff about forming a recovery plan for the scheme.

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