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International Airlines Group’s subsidiary British Airways has closed its New Airways Pension Scheme (NAPS) to future accrual and its British Airways Retirement Plan (BARP) to future contributions from March 31, 2018.
The schemes have been replaced by a flexible benefits scheme, incorporating a new defined contribution pension scheme, called the British Airways Pension Plan (BAPP). It offers a choice of contribution rates and the ability to opt for cash instead of a pension.
The annual costs for BAPP are expected to be approximately £80m lower than the equivalent NAPS and BARP costs in 2017.
The next full NAPS actuarial valuation is due as at March 31, 2018. It will reflect the closure to future accrual, as well as the normal detailed review of the circumstances at the valuation date, including financial and demographic assumptions.
Steve Gunning, British Airways’ chief financial officer said: “This is an important step in managing the risk in NAPS and ensuring the airline has an appropriate cost-base for the future. The new arrangements include a market-competitive defined contribution scheme and will stop the build-up of further liabilities and risk in NAPS. This will help to improve the security of existing benefits.”