mast image

Special Report

Impact investing

Sections

British Airways sacks pension fund chairman over investment dispute

Tags

Related Categories

British Airways (BA) has refused to renew the contract of Paul Spencer, chairman at both of the airline’s pension funds, due to an apparent disagreement over investment policy. 

Spencer has been chair of the £11.7bn (€16.6bn) New Airways Pension Scheme (NAPS) and the £7.3bn Airways Pension Scheme (APS) since 2010 on a five-year contract.

The industry veteran also chairs the £40bn BT Pension Scheme and the Rolls-Royce Pension Scheme, some of the UK’s largest corporate pension funds.

According to a source close to the trustee board, BA’s decision stemmed from a disagreement between the airline and Spencer and his board over the de-risking of the NAPS.

Spencer supported de-risking and a shift towards liability-matching, the source said.

However, with fewer growth assets, this would have entailed a reduction in expected return calculations, as well as potentially higher contributions from BA.

The NAPS had a deficit of £1.9bn at the end of March 2013, as the scheme currently undergoes its triennial review, with results expected in a few months.

The trustees agreed a funding plan with the airline to eliminate the deficit by 2026 that saw £242m in deficit contributions in the year to April 2014.

The NAPS opened prior to the airline’s privatisation by the UK government in 1987 and replaced the APS with higher contributions and less generous indexation.

Its last annual report to April 2014 said it had around 70% of its assets in equities, private equity, alternatives and property.

It also has 25.7% in bonds, 10.9% of which is in index-linked UK Gilts, with around 32% of its 67,000 members actively accruing benefits.

Spencer and his board have butted heads with the airline in the past, as British Airways sued its own trustees for offering a discretionary increase in the APS.

BA argued that the trustee board lacked the legal right to act without its permission.

Have your say

You must sign in to make a comment

IPE QUEST

Your first step in manager selection...

IPE Quest is a manager search facility that connects institutional investors and asset managers.

  • QN-2546

    Asset class: Real Estate Equity Fund (non listed).
    Asset region: Europe.
    Size: Total CHF 600m, approx. CHF 100-300m per fund investment.
    Closing date: 2019-06-28.

Begin Your Search Here
<