Unite and GMB unions make veiled threat after airline proposes overhaul to limit payouts from defined benefits scheme
British Airways could face further industrial action, this time over plans to curb retirement benefits for 17,000 pension scheme members, a move unions say would have consequences for the carrier.
The airline is proposing an overhaul that would limit retirement payouts from its defined benefit scheme (Naps). It blamed low interest rates and rising life expectancy for an increase in the scheme’s deficit to £3.5bn from £2.8bn in 2015.
BA will close the scheme to future accruals, meaning that staff will not see their retirement payout increase in line with their salary and the length of their service. Instead the airline is understood to be considering opening a new scheme that will include the Naps members along with 20,000 members of its less-generous defined contribution scheme (Barp), under which payouts are tied to the performance of investments.
Despite claiming this would yield “improved terms for the majority of UK colleagues”, BA faced a veiled threat from the Unite and GMB trade unions of fresh strikes, adding to 85 days of industrial action so far this year.
“Unite and GMB within British Airways must express on behalf of our members and in the strongest possible terms, both our dismay and bitter disappointment,” the unions said a joint statement.
“Thousands of loyal and long-serving staff, who have helped build British Airways into a world-class flag carrier for this country and one of the most recognisable global brands, now face uncertainty in their retirement. Both unions jointly demand urgent talks to discuss both the impact of this announcement, if a solution can be found and, if not, the consequences the airline may face.”
Financial analysts employed by the unions are understood to have made proposals to whittle down the scheme’s deficit that would have seen members accept lower payouts in return for higher contributions from the airline.
But BA said it had put £3.5bn into Naps since 2003, the year it was closed to new members, but had been unable to plug an expanding deficit.
“In 2017 alone the airline will pay £750m in pension contributions and has already committed to provide between £300m and £450m a year till 2027 to address the Naps deficit,” it said. “If Naps remained open to future accrual, the cost to the company of providing future benefits to Naps members could rise to 45% of individuals’ pensionable pay in 2018 – more than four times the typical employer contribution of UK airlines.”
BA has been hit by strikes this year in a separate dispute over pay with its mixed-fleet cabin crew, who are not part of the Naps scheme.
Any further labour disputes will once again pit the unions against Willie Walsh, the chief executive of BA’s parent company IAG, who has garnered a reputation for taking a tough stance against unions.