Despite an estimated £1.4 billion deficit, British Airways has decided not to follow Rentokil and close its final salary pension scheme to existing members. BA will put initial proposals for tackling the deficit to employees and pension fund trustees in February 2006.
Options include forcing staff to increase their contributions, moving to an average salary arrangement and increasing retirement ages. Scottish Power has also taken steps to protect its final salary scheme, which has a deficit of around £150 million, announcing that it will close to new members, and increasing by up to 40% the amount which thousands of existing employees will have to contribute to their pensions. The company is also raising its pension age from 63 to 65. Staff who have been with the company since before privatisation will be protected.
Our view
A very brave and costly move - we wonder how many employees know how lucky they are?