Court approves BA trustees' pension increase settlement
On the go: Trustees of British Airways’ defined benefit schemes have had a settlement allowing them to pay discretionary increases approved by the High Court.
The out-of-court settlement brings to a close six years of litigation, which has centred around the Airways Pension Scheme trustees’ decision to grant themselves the power to pay discretionary uplifts in 2013.
Under the terms of the settlement, the trustees have the ability to grant discretionary increases from 2021, bringing pension values up to the annual increase in the retail price index, subject to affordability tests. Catch-up increases may be paid in the interim.
In exchange, BA will not be required to pay deficit recovery contributions or cash sweep payments into the scheme until funding drops below 100 per cent.
“We are now making arrangements for eligible pensioner members to receive the one-off lump sum (of up to 4.6 per cent) and catch-up increase payments (of up to 1.7 per cent and 0.7 per cent) in the December 2019 pension payroll,” the trustees told members in an update posted to the scheme’s website.
The trustee communication said members will be sent full details of the payments they can expect in December.
Explaining the settlement in April, the scheme said it now expects to be able to pay increases in line with RPI.
“The key to unlocking the deal was the trustee’s buy-in deal with [Legal & General] in the summer of 2018, and a collaborative approach between the trustee and sponsor to find a mutually acceptable solution,” Fraser Smart, chief executive of British Airways Pensions, said at the time of the settlement being agreed.