British Airways has finally agreed an out of court settlement with the trustees of the Airways Pensions Scheme.
The long-running dispute, which began in 2013, centred around a decision to award a 0.2 per cent discretionary increase to members of the scheme (half the difference between the retail price index and the consumer price index).
The trustees of the Airways Pension Scheme amended the plan’s rules in 2013 to give themselves the power to grant discretionary pension increases to retirees. Their decision followed moves by the 2010 coalition government to link pension rises for retired public-sector workers to the CPI rather than the RPI.
It resulted in a lengthy court battle between BA and the trustees on such issues as the scope of trustee powers. BA won the case in the Court of Appeal in 2018 and the case was due to be heard by the Supreme Court in July this year.
According to an update on the APS website, under the settlement the trustees of the APS will be able to award discretionary increases, subject to affordability tests, so that APS pensions are increased by the annual change in the RPI from 2021 with interim catch-up increases,
These include a one-off lump sum for pensioners in relation to the period from 2013 to April 2019 for which no discretionary increases were paid due to the litigation and a further discretionary increase in 2020.
"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," said Fraser Smart, chief executive of British Airways Pensions.
The proposed settlement is still subject to approval from the High Court.
