BusinessCompany NewsBA ditches final salary scheme

BA ditches final salary scheme

British Airways has become the latest UK public company to ditch its final salary scheme for all new employees.

The company said it was moving from a defined benefit final salary scheme to a defined contribution basis from the autumn, placing the risk of poor performance from investments at the feet of employees rather than the company.

The decision will not affect the pension benefits of the 101,000 members of its two existing schemes.

BA is just one of many of the UK’s largest employers to end its final salary scheme, many of them blaming their decision on the controversial new pensions accounting rule, FRS 17.

The new standard requires companies to book pension fund deficits on their balance sheets. Under FRS 17, BA’s pensions schemes showed a shortfall of £394m at 31 March this year.

John Rishton, BA’s chief financial officer, said: ‘The change to a defined contribution pension arrangement for future new UK staff is a measured and necessary response to the competitive environment in which British Airways operates.’

BA said the new accounting standard, as well as rising life expectancy and volatile markets all led to the company’s decision to end their scheme.

Related Articles

M&S business rate liabilities based on £570m rateable value

Company News M&S business rate liabilities based on £570m rateable value

4m Emma Smith, Managing Editor
BDO replaces Deloitte as Mitie auditor

Audit BDO replaces Deloitte as Mitie auditor

8m Emma Smith, Managing Editor
CVR Global appoints partner in London office

Company News CVR Global appoints partner in London office

1y Alia Shoaib, Reporter
FTSE100 failing to provide adequate ethics information

Company News FTSE100 failing to provide adequate ethics information

1y Alia Shoaib, Reporter
Moore Stephens recruits new private client partner

Accounting Firms Moore Stephens recruits new private client partner

1y Emma Smith, Managing Editor
Magma Group announces merger, partner promotions

Accounting Firms Magma Group announces merger, partner promotions

1y Emma Smith, Managing Editor
BDO on ‘recruitment spree’ with multiple partner appointments

Accounting Firms BDO on ‘recruitment spree’ with multiple partner appointments

1y Emma Smith, Managing Editor
Brand strength leads to fee income growth for RSM

Accounting Firms Brand strength leads to fee income growth for RSM

1y Emma Smith, Managing Editor