British Airways, Harmondsworth, England, agreed to settle a dispute over increases to pension benefits with the trustees of the £13.3 billion ($17.3 billion) Airways Pension Scheme.
Under the terms of the proposed settlement, still subject to approval by the U.K. High Court, the trustee will be able to award discretionary increases so that pension benefits will be increased in line with annual increases to the retail price index, according to the pension fund's website.
At the same time, British Airways will not have an obligation to make deficit recovery contributions from Dec. 31, returning to paying these contributions only if funding falls below 100%.
The changes resulting from the settlement are expected to be implemented in the summer of 2019 at the earliest, the website said. Proposed payments will be made or backdated starting on April 8.
The settlement terms include a one-off lump sum for participants for the period of 2013 to April 2019 for which no increases were paid due to the litigation. The trustees of the pension fund were disagreeing with BA if they were within their rights to make increases to the pension benefits according to the RPI rate without the plan sponsor's agreement.
Discretionary increases are also intended to be made from 2021 onward so that the overall pension increase is in line with the annual increase in RPI, the pension fund website said.