The British paper reported that BAE Systems also intends to make other cuts to its employee pension packages in order to cushion its £3.1 billion pension shortfall.
The company, according to the Guardian, plans to funnel a one time £1.1 billion payment into the pension fund and increase its own monthly contributions into the plan.
Mike Turner, BAE’s chief executive, told the paper that the decision was the result of a long process of negotiation. “We have worked in close consultation with our employees, trades unions and scheme trustees to develop pension arrangements acceptable and affordable to both company and its people,” he added.
Staff members at BAE have already voted to accept the new retirement plan, which is predicted to decrease the pension deficit to £500 million by 2016.
BAE systems struck a deal in February in an effort to salvage its DB scheme for its 40,000 existing UK employees by paying in £800 million, mostly in cash and property, and asking plan members to finance the remaining deficit through measures such as extending working years or reducing benefits (See UK Pension Mediation Service Launched).