British Airways has hit new turbulence over its pension fund, with a trustee resigning in protest over a decision to downgrade payments to retired staff.
Mike Post, a trustee on the Airways Pension Scheme (APS), the older of BA’s two retirement plans, resigned nine days ago after a board meeting. Trustees had voted to use the consumer prices index (CPI) measure for this year’s inflation-linked increases, rather than the higher retail prices index, which was used in the past. It means this year pensioners will receive a 3.4% increase, rather than 4.6%.
BA’s pensions are about £3.7 billion in deficit. The change of index is expected to cut the shortfall by about £770m. The move follows chancellor George Osborne’s decision to make the same change to public-sector pensions, which the BA schemes follow.
The APS trustees have the power to make a discretionary extra payment, but chose not to. Post, who declined to comment yesterday, is understood to have resigned over this decision. The trustees are taking legal advice on what the scheme rules allow them to do.
The switch has caused considerable anger, with some pensioners saying it could over time erode their payments by 20%.
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The Association of British Airways Pensioners has called for a public meeting of pensioners, which is likely to be held in the next few months.