British Airways is proposing to its retirement age for its staff. It will also make a payment of £500 million ($873.5 million) to tackle its pension deficit.
The retirement age for cabin crew will rise to 65 from 55 and for pilots to 60 from 55.
The current compulsory retirement age for pilots and cabin crew is 55; the normal retirement age is also 55.
This is part of British Airways’ plant to clear the £1 billion deficit in its pension scheme, along with a slower accrual rate and a cap on pension rises.
The proposal follows three months of talks with its 34,500 pension scheme members. It must now go before unions and BA’s pension trustees.
Willie Walsh, chief executive, said: “This is a solution that will provide competitive, affordable pensions for the future. These changes are necessary to clear the past deficit and to contain the amount of future funding needed. It means working longer to get a similar annual pension, but one that is more secure. This should address the pension problem at British Airways once and for all.”
“After the changes are accepted, the airline will make a payment of £500 million into the fund. This is on top of the £350 million the company will have paid towards the past deficit by December 2006.”
Also part of the proposal will be that pensionable pay will not increase more than inflation and pension increases on retirement will be capped at 2.5 percent each year.
Walsh added: “The changes to members’ future benefits will reduce the anticipated deficit by £450 million. We will also be able to make contributions for future service we can afford.
“This package of measures is vital if we are to achieve a competitive cost base, deliver a 10 per cent operating margin, be fit for growth and invest in our future.”