The latest actuarial valuation, calculated every three years to determine the funding position of British Airways’ two main UK pension schemes - Airways Pension Scheme (APS) and the New Airways Pension Scheme (NAPS) - has been completed.

The actuary has calculated that the APS surplus (£820 million at the last valuation in March 2000), has fallen to £45 million and the NAPS deficit has risen from £221 million at March
2000 to £928 million at March 2003. The government minimum funding requirement (MFR) is covered in both schemes.

The actuary has determined that annual contributions of £26 million for APS are required from November 2003. For NAPS, contributions will increase by £107 million a year to £225 million effective January 2004.

John Rishton, British Airways’ chief financial officer, said: “The deficit is mainly due to the poor performance of stockmarkets in the last three years and changes in life expectancy.

“British Airways remains committed to its existing pension schemes but these funding increases are a substantial additional burden, particularly in the current difficult trading environment. We will be working with our unions and staff to find a sensible solution.”

Both APS and NAPS are final salary schemes and are closed to new members. The airline introduced the British Airways Retirement Plan (BARP), a defined contribution pension scheme, in April 2003 for new staff.

APS and NAPS together have combined assets of some £9 billion. BA has had a pension contribution holiday from APS but has contributed annually to NAPS since it was set up.

á The actuarial valuation takes into account the company and employee contributions, member profiles and demographics, likely investment returns from the pension funds and the stock market performance and then calculates the funding position.

á APS was set up in 1948 and has 35,500 members of whom 3,500 are serving staff, 26,800 pensioners in payment and 5,200 deferred pensioners. It closed in 1984. BA has had a contributions holiday from APS since 1989.

á NAPS was set up in 1984 and has 65,000 members of whom 39,700 are existing staff, fewer than13,000 are pensioners and about 17,600 deferred pensioners.

á BA has never had a contributions holiday for NAPS and currently pays three times as much as each individual into the scheme. So for every £1 paid in by the employee, BA pays £3.

á The Minimum Funding Requirement (MFR) is a Government measure that determines the minimum level of contributions needed to fund a pension scheme.

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