LONDON (dpa-AFX) - International Consolidated Airlines Group (IAG.L, INCC.PK) announced Friday that its subsidiary British Airways has decided to launch a flexible benefits scheme incorporating a new defined contribution pension scheme.
The decision was taken following consultation with its trade unions and employees.
The scheme will open on April 1, 2018 replacing the main UK defined benefit scheme, the New Airways Pension Scheme or NAPS, and the main UK defined contribution scheme, the British Airways Retirement Plan or BARP.
The changes are subject to NAPS trustees agreeing to amend the scheme's rules to enable closure to future accrual.
The company said the new scheme will offer market-competitive arrangements with a choice of contribution rates and the ability to opt for cash instead of a pension. Active NAPS members will also be offered a choice of transition arrangements including a cash lump sum, additional company pension contributions or additional pension benefits in NAPS prior to its closure.
The overall financial impact on British Airways will depend, in part, on the transition arrangements members select.
NAPS opened on April 01, 1984 and closed to new joiners on March 31, 2003. It represents around 47 percent of BA's active employees currently with 52 percent in BARP.
These changes are aimed at addressing the rising cost of future pension provision and the volatility in the NAPS scheme which had a deficit of 2.8 billion pounds at its last valuation, as at March 2015.
The next valuation will be as at March 31, 2018, but will now reflect the closure of the scheme to future accrual.
In London, IAG shares were trading at 634.50 pence, up 1.76 percent.
Copyright RTT News/dpa-AFX