British Airways has decided to freeze its defined benefit fund and launch a new defined contribution plan in its place, a spokesman said.
The £15.5 billion ($20.7 billion) New Airways Pension Scheme, London, will cease to accrue benefits on March 31, he added. The plan was closed in 2003.
Starting April 1, the new DC plan will also replace the existing DC offering, the £600 million British Airways Retirement Plan. The new plan is considered a flexible benefit plan and every participant will receive a 5% employer contribution, regardless of the employee contribution.
The decision follows British Airways' proposal to freeze its defined benefit fund in efforts to address the increasing funding deficit faced by the New Airways Pension Scheme.
The new plan will offer retirement arrangements with a choice of contribution rates and the ability to opt for cash instead of a an annuity, International Airlines Group, parent company of BA, said in a news release Friday.
