Trustees of the British Airways (BA) pension schemes are to go to court in the new year in a bid to clarify the company’s position on a proposed merger between its two retirement funds, after concerted pressure against the move by BA pensioners.
BA says the amalgamation of its £5.9bn (e9.3bn) Airways Pension Scheme (APS) and the £3bn New Airways Pension Scheme (NAPS) has been prompted by the minimum funding requirement (MFR) and the need for greater investment freedom in the APS plan.
Jenny Rosser, pensions manager and secretary at BA, explains: “The old APS scheme, which closed in 1984, is predominantly made up of pensioners. To match the MFR profile the trustees either need to move into considerably more gilts, which they’ve started doing, or they need an investment reserve, which they’ve also got.”
Rosser says the assets would be better managed by combining the two schemes. “Instead of having a predominance of pensioners and a particular MFR profile, if you include the new scheme with its active staff you get a different profile and more chance to release investment reserves and create more surplus for the fund. Secondly, the fund has the opportunity to stay with equities, which over the long periods have given better returns than gilts.”
Rosser says the merger was proposed by BA and that trustees have considered it for months. “After legal and actuarial advice they are unanimous in agreement that it should go forward to check whether the court considers it a good deal.”
George Bell, APS representative for the beneficiaries (pensioners), who have been campaigning against BA over pension fund surplus issues since 1989 under the banner of the Association of British Airways Pensioners (ABAP), says the merger is not in the best interest of BA pensioners. “Pensioners and active members of the APS voted overwhelmingly this year by 78% to oppose the merger. APS is a fully funded scheme with an investment reserve of £584m because of a mismatching of its assets due to MFR,” he adds. Huge Wheelan

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