Consultations are underway over a new defined contribution scheme for British Airways staff, it has been revealed.

In order to plug its ballooning pension deficit, which reached £3.7bn in March this year, British Airways is proposing a more “flexible” DC scheme to replace its defined benefit scheme, the New Airways Pension Scheme.

The NAPS is to be closed to new accruals, with all employees transferring into the British Airways Retirement Plan DC scheme in April 2018.

Despite this, the company has stated that employees will maintain the benefits they have already earned in the NAPS scheme and those already receiving NAPS pensions will be presented with “a choice of transitional arrangements” such as lump sum options and access to higher contribution rates.

The DC scheme currently has c.20,000 members.

British Airways announced its intention to close its main defined benefit pension scheme, the New Airways Pension Scheme (NAPS) earlier this month.

"If NAPS remained open to future accrual, the cost to the company of providing future benefits to NAPS members could rise to 45% of individuals' pensionable pay in 2018 - more than four times the typical employer contribution of UK airlines."

In response to the proposal, workers unions Unite and GMB issued a joint statement noting their “dismay and bitter disappointment at the news.”

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