A JUDGE has called British Airways “entirely unrealistic and unreasonable” for expecting trustees of its pension scheme to pay for their own legal defence in a row over pension contributions.
BA is suing trustees of its Airways Pension Scheme (APS) for boosting payments to its 29,000 mostly retired members after the scheme was tied to the lower consumer prices index (CPI) rate of inflation, instead of the retail prices index (RPI).
BA argues that the payout rise was “perverse and irrational” and claims it will heap more pressure on the deficit-laden scheme and the airline.
However, in a partial victory for the 12 trustees, a High Court judge ruled that the trustees should not have to bear their own defence costs, instead saying these can be paid for out of scheme assets.
“The trustees cannot be expected to take any risk at all of personal exposure to their own costs and expense of the litigation if they are litigating in substance for the benefit of the scheme’s members as a whole,” ruled Sir Terence Etherton, chancellor of the High Court.
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The core case is expected to reach trial next year. The trustees say the 0.2% extra payout to members in 2013 will cost the scheme £12m over its lifetime.
The trustees said they were disappointed by BA: “In the absence of BA adopting a more constructive attitude, the trustees will now press on with their defence through the appropriate legal channels.”
BA said: “We do not believe the long-term security of members’ benefits should be put at risk for the advantage of a group of retirees who already enjoy more generous pensions than the vast majority of employees can look forward to.”