BAA staff accept final salary closure
UK - 71% of union members have voted to accept a pensions package from the British Airport Authority (BAA), which will see the final salary scheme closed to new entrants and replaced by a defined contribution (DC) scheme.
Unite the Union balloted around 6,000 BAA workers on the pension deal, which it claimed provides safeguards for members and is the "best basis for pension security" in the future.
The deal provides 12-year protection and guarantees for existing members of the final salary scheme in relation to benefits and contributions, however, from now on new entrants will be automatically enrolled into a DC scheme with a 15% contribution rate, ill health retirement and death in service benefits, as well as protections for partners.
Unite confirmed that the agreement to close the final salary scheme to new entrants was a "bitter pill to swallow", and was made despite the fact industrial action was suspended in January on the basis that BAA had "withdrawn its decision to close the scheme to new entrants". [See earlier IPE.com article: Unions scrap strikes after BAA climbdown]
However, Steve Turner, national secretary for aviation at Unite, claimed that "essentially it [the scheme] wasn't kept open for new members" in January, and instead the strikes were called off because the unions and BAA had agreed to further negotiations on the future of the final salary scheme rather than it being closed immediately.
He said: "Our position was always to keep the scheme open to everybody, but over the last few months we have been negotiating on the best possible option should it eventually close to new staff."
However he pointed out the final decision on the pension package was down to the staff of BAA, and the recent ballot resulted in 71% in favour of accepting the settlement.
Turner said: "The closure of the final salary scheme to new employees is a bitter pill to swallow and a move we fought hard to prevent. A clear majority of our members accept, however, that these changes provide the best basis for pension security long into the future while offering a decent replacement to those joining the company now."
"Our members faced a tough choice. The company is clearly in some difficulty following its sale to Spanish group Ferrovial, which, coupled with the continuous, unwarranted attacks on its operation of seven of the UK's major airports, and the impact of the credit crunch, is playing havoc with its refinancing plans," he added.
The changes to the BAA scheme will take place immediately, although certain groups, including members of staff who were under an offer of employment before the ballot and apprentices with an offer to join the company before the scheme closed, will also be protected under the terms of the deal.
Figures from BAA's annual report for 2007 revealed at the end of December 2007 the BAA pension scheme had assets of £2.3bn (€2.9bn) and a surplus of £144m, under IAS19 accounting standards.
If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email email@example.com