BRITISH AIRWAYS IN LANDMARK PENSIONS CASE

British Airways is preparing for a High Court clash with one of its pension fund’s trustees over increases in payments to the airline’s retired workers in a closely watched dispute that could see hundreds of millions of pounds at stake. The fiercely contested case between BA and its trustees, which will be heard next February, is significant because the hearing is likely to clarify the role and responsibilities of pension fund trustees. It stems from the government’s decision in 2010 to link pension increases for retired public sector workers to the Consumer Price Index rather than the Retail Price Index (RPI), which is seen as a more generous measure of inflation. The government’s decision also applied to private sector defined benefit schemes such as BA’s, which predated the airline’s merger with Spain’s Iberia in 2011 when it became part of International Airlines Group. BA is fighting the trustees over their 2013 decision to award a 0.2 per cent discretionary increase to pensioners in the scheme — amounting to a pension bump of half the difference between RPI and CPI. BA said it was “committed” to ensuring that its company pension schemes should act in the best long-term interests of scheme members. “The scheme in question has a significant deficit, which British Airways is funding with a clear recovery plan,” the company said.