UK – BAE Systems is planning to reduce its £2.8bn (€4.1bn) pensions deficit by almost 18% following consultations between the company and UK employee representatives.
The weapons maker plans to plug £500m (€742m) – in the form of cash and assets - into the fund. A BAE spokesperson told IPE that the mix would include “more cash than property” but could not give a percentage ratio.
The payment follows long-running talks initiated in the summer between BAE and employee representatives, including aerospace unions.
A weekend report claimed employees are being asked to consider reduced scheme benefits, including payout cuts for those taking early retirement, in return for the payment.
Existing pensioners will not be affected by these decisions, however.
The spokesperson was unable to comment any further on the consultations as they are still in progress. There is also no fixed date for a final decision.
The remaining £2.3bn deficit will be met “in all sorts of different ways and won’t directly involve members having to pay in”, said the spokesperson.
He put the deficit – the second largest in relation to stock-market value among FTSE 100 companies, and ranked behind British Airways – on the change in life expectancy, amongst others.
The fund has between 37,000 and 40,000 contributors.
In 2003 BAE increased its contribution to the company scheme from 11.7% to 18.2%, while employees boosted their input from 5% to 9.3% of pay.