The Pensions Regulator’s new objective to support employer growth has filtered through to members of the British Airways pension schemes, where trustees have met with the airline and regulator as part of the valuation process.
An update inserted into the May newsletters of both the Airways Pension Scheme and New Airways Pension Scheme informed members about the new statutory objective to take into account employers’ sustainable growth, was first announced in the Budget in March.
Representatives from the schemes discussed with the company the impact of its funding agreement on the employer’s business. “We considered how these plans will affect BA’s financial position over the years ahead and the strength of the company in relation to the scheme’s existing recovery plan,” said the newsletters.
A trustee subgroup also met with the regulator to monitor its progress, the update reported, though a spokesperson for the scheme said those meetings were not specifically about the growth objective.
The regulator’s 2013 funding statement emphasised the flexibilities available to schemes around the funding deals they agree with sponsors, which has been broadly welcomed by industry figures.
“Given the financial burdens that defined benefit schemes pose for employers, anything which assists employers to honour their obligations is to be encouraged,” said Wyn Derbyshire, head of pensions at law firm SJ Berwin.
Nick Salter, senior partner at consultancy Barnett Waddingham, said the security of members’ pensions had to be paramount.
“This is the right framework to enable the trustees to take [the employer’s financial health of the company] into account, and come to a conclusion about how much they do need up front and how much they are prepared to allow the company to use the cash that it is generating for other purposes.”
The regulator should keep a close eye on the documentation that is being prepared by the trustees before making a decision, Salter added. “It is going to be very important to keep the audit trail [showing] how they came to a conclusion,” he said.
