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Winton: closing defined benefit pension scheme at BA highlights liabilities

British Airway’s decision to close the New Airways Pension Scheme (NAPS) raises the risk of defined benefit pension liabilities and highlights the problems with a focus on dividend policy, warns Anne-Marie Winton, partner at ARC Pensions Law LLP

With some rather unseasonal timing, in mid December 2017, British Airways announced the bad news to staff of the planned closure of its defined benefits pension scheme (the New Airways Pension Scheme, known as NAPS) to future accrual in April 2018, with a view to addressing the £2.8bn deficit in the scheme.

Future benefits will be provided on a defined contribution basis, exposing only those employees who are members of the replacement scheme, not BA, to the investment risk in the underlying assets.

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