Unions reject BA pension plans

17-11-2006

Unions reject BA pension plans
Trade unions have said that "substantial differences" remain between them and British Airways (BA) over plans by the airline to address its £2.1 billion pensions deficit.

In a statement earlier this week BA had said that it was keen to reach a "common understanding" with unions over plans to boost the value of its pensions scheme in return for staff accepting "future benefit changes".

Following talks with union officials yesterday over the future of the new airways pension scheme (Naps), BA agreed to revise its plans to raise the normal retirement age for staff to 65 in exchange for higher pension contribution rates from its workers.

BA's chief financial officer Keith Williams said the airline realised its original proposals had represented a "sticking point" between the company and unions.

Currently, the normal retirement age for BA pilots and cabin crew is 55 and 60 for ground staff.

After negotiations with union officials, BA said that it was subsequently prepared to offer a normal retirement age of 60, providing staff increased their pension contributions.

Under the revised plans, air crew would be required to increase their contributions from 6.5 per cent to 11.25 per cent over the first five years following the introduction of the changes, while ground staff would see their contributions increase from 5.25 per cent to ten per cent.

After the five year period, all BA staff would be required to pay a standard contribution of ten per cent, the airline said in a statement.

BA said that it would also boost its annual contributions into its pension scheme from £235 million to £272 million.

Commenting on its revised offer, BA chief financial officer Mr Williams said: "Staff can still choose not to pay any extra but it will mean working longer to get the same pension."

However in a joint statement, trade union officials said that while BA had "made movements" towards their position, "substantial differences" remained between the two sides over the airline's future pension plans.

"The trade unions recognised that BA has made movements towards the trade unions' position, however there still remain substantial differences and the trade unions also registered their frustration that certain financial information was incomplete," said the statement, which was issued following yesterday's meeting.

Talks are set to continue between BA and the unions in a bid to reach an agreement.

BA said earlier this week that Naps trustees had agreed in principle to a ten-year funding plan to address the deficit in the pension scheme, with the airline pledging to increase its planned one-off cash injection into the fund from £500 million to £800 million.


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