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Learning English - Words in the News BA cuts pension costs | ||||||||||||
British Airways - one of the world's largest airlines - has decided to cut pension costs by raising the retirement age of its staff. Pilots will retire at 60 instead of 55 and cabin crew will stay on with the company until they're 65. The move is the latest sign of a pensions funding crisis facing many British firms. Mark Gregory reports. Recent changes in accounting rules have forced companies in Britain to state much more accurately the true financial state of their pension funds. The reform has highlighted huge deficits - meaning the amount of money in pension schemes doesn't cover what will need to be paid out in future to retired workers. British Airways is one of the firms most affected - its pension fund has a deficit of nearly two billion dollars. That's larger in relation to the value of the company's shares than any other firm in the top 100 shares quoted on the London stock market. For months BA has been locked in tense negotiations with staff, and trade unions were threatening strike action. The arrival of a new chief executive with a tough reputation for cost-cutting further raised the stakes. At the end of it all the company is proposing to raise the retirement age for pilots to sixty and other staff to sixty-five. The company will also inject over eight hundred million dollars of its own cash to improve the health of its pension fund. Lots of other big British firms will be watching closely - several hundred of them have already closed their pension schemes to new members. One or two have closed their pension schemes altogether, meaning that existing staff will be worse off in retirement. The pensions crisis facing British firms is one aspect of a much bigger issue: people in rich countries are living longer which means it costs much more to keep them in old age. Mark Gregory, BBC News accounting rules pension funds reform highlighted huge deficits locked in tense negotiations were threatening strike action with a tough reputation for cost-cutting raised the stakes inject worse off in retirement |
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