BAE Systems to arm pension plans with $1.6 billion in 2020

BAE Systems, London, said Thursday it will contribute £1.24 billion ($1.6 billion) in 2020 to its pension plans, accelerating its pension deficit recovery plan timetable.

Following a consultation with the U.K. Pensions Regulator, the global defense, aerospace and security company will also contribute deficit funding of £250 million into its plans by March 31, 2021.

The new deficit recovery schedule replaces BAE's previous plan, after its pension funds' deficit improved by £200 million to £1.9 billion in 2019, from £2.1 billion in 2017, a BAE spokeswoman said.

However, the previous deficit recovery plan, which was set to run until 2026, would have seen the company make a similar contribution — £1.47 billion — between 2020 and 2026.

The BAE spokeswoman said the new recovery plan resulted from a triennial valuation conducted at the end of Oct. 31, which followed the consolidation of six of BAE's nine defined benefit plans into one in an effort to reduce administration costs. Among the consolidated plans were BAE Systems Pension Scheme, the Alvis Pension Scheme, the BAE Systems 2000 Pension Plan and the Shipbuilding Industries Pension Scheme. Other BAE plans, Royal Ordnance Pension Scheme, the Royal Ordnance Senior Staff Scheme and BAE Systems Executive Pension Scheme, which are fully funded, will not affected by the contribution.

BAE pension funds' assets were £27.7 billion as of Dec. 31, up from £25.7 billion at the end of 2018.