BA: DC Plan Not as Rich as DB Offering
Mervyn Walker, director of UK
airports at BA and chairman of trustees of the company’s
two DB plans, said that BA has found its discussions with
its unions “very difficult” and that its well-publicized
pension deficits were seen by staff as the company’s
problem, according to an IPE report.
“Our DC scheme is not going
to provide anything like the same benefits as our DB
schemes,” said Walker at a conference organized by the
National Association of Pension Funds.
The company decided to launch
a DC offering in part due to competitive pressures since
many of its US competitors had been able to “walk away”
from their DB obligations as part of the American carriers’
bankruptcy filings, while its newer UK rivals had never had
DB coverage.
“We went for a pure DC scheme for competitive
reasons,” Walker said. Other DC benefits, according to
Walker: lower risks, simplicity and flexibility.
The new DC plan, known as
BARP – the British Airways Retirement Plan – was
launched in 2003 and currently has 1,501 members and
assets of 1.1 million pounds, Walker said.APS, or Airways Pension
Scheme, and NAPS, the New Airways Pension Scheme, are
worth six and four billion pounds respectively. The
defined benefit plans are 906 million pounds and 2.7
billion in deficit.
Walkersaid APS has been
gradually moving into bonds, while there were now
immediate plans for NAPS to move towards bonds.