Simple English guide
| Term | Meaning |
| Actuary | A professional adviser to the Trustees on the Scheme's ability to meet its long and short-term liabilities. The actuary calculates what needs to be paid into the Scheme by BA and current BA employees who are in the Schemes. |
| Additional Voluntary Contributions (AVCs) | You can make extra tax-free payments on top of your standard BA pension to provide additional benefits for you and your dependants when you retire, die or leave the Scheme. There are two ways to save AVCs, SmartAVCs and normal AVCs |
| Adult Survivor's pension | The basic pension from the Final Salary Scheme includes a pension for your spouse or partner when you die. A legal spouse or registered civil partner would automatically qualify for this benefit. Members who are not married or in a registered civil partnership but who have a common-law spouse, live-in partner or someone financially dependent upon them to a substantial extent, can ask the Trustees to consider their dependant for a discretionary pension. See Surviving Dependant. |
| Annual Allowance (AA) | Set by HM Revenue & Customs, currently £50,000 a year. Members whose APS or NAPS pension value increases by more than £50,000 between 1 April and 31 March could pay an additional tax charge. A factor of 16 is used when calculating the value of pension to compare against the AA so this would be equivalent to a growth in pension of £3,125 p.a. or Additional Voluntary Contribution (AVC) payments of £50,000 or a combination of the two up to the £50,000 limit. Any pension savings a member may have outside of the BA Schemes which increase in excess of the Consumer Price Index (CPI), will also be included. Full details can be found on http://www.hmrc.gov.uk/pensionschemes/annual-allowance/index.htm |
| APS | The Airways Pension Scheme, which was closed to new members in 1984. |
| BA | British Airways plc or any other company in the British Airways group which uses APS and NAPS for its employee pensions. |
| BA's contribution | Under Final Salary, BA pays whatever is necessary to provide your benefits. Under BAMPS, BA pays the same contribution as you up to a maximum of 8% of your Pensionable pay. |
| BAMPS | The Money Purchase Section of NAPS. Both you and BA make payments to the Scheme. These payments are invested and grow with interest. At retirement you decide the type of pension to buy with the money in your individual BAMPS retirement account. |
| Basic pension calculation | This is the calculation used to work out what you will receive when you retire. For Final Salary = (Pensionable service x Retiring pay) divided by 52 for Flying Staff and 56 for Ground Staff. |
| Basic State Pension | A pension paid by the government to all employees who have paid sufficient National Insurance contributions over their lifetime. |
| British Airways Pension Investment Management Ltd (BAPIML) | An independent company which manages the pension funds, made up of BA's and members' payments into the Schemes. |
| British Airways Pensions Services Ltd (BAPSL) | An independent company which runs the Scheme on a day-to-day basis, including calculating and paying benefits, and communicating with members. |
| Build up rate | The rate at which your pension grows over the time you are in the Final Salary Scheme and paying contributions. The standard rate is 52 for Flying Staff and 56 for Ground Staff. |
| Contracted-out | You and BA pay the lower rate of National Insurance contributions and you do not build up benefits in the earnings related part of the State Second Pension (S2P). In return for this, the Scheme guarantees to pay you a pension at least equal to what you would have received from the S2P if you had paid the full rate of National Insurance contributions. |
| Contribution rate | The percentage of your Pensionable pay that you contribute each month to the Scheme |
| Current single person's Basic State Pension | The basic pension received from the government. This changes each year. The 2011/12 basic state pension is £102.15 per week. |
| Deferred member | A member who has opted out of paying into the Scheme or has left BA and kept aside their BA pension to receive at retirement. |
| Dependent children | Children up to the age of 16, or up to the age of 23 if in full-time education/vocational training or seriously incapacitated to the extent that they cannot earn a living. |
| Early retirement age | Anytime between age 50 and Normal Retirement Age. The minimum retirement age of 50 continues to apply to members of APS who retire from BA and draw all their Scheme benefits at the same time. An APS member who opts out of the Scheme will only be able to draw their pension from the earlier of their 55th birthday or the date their employment with BA ends. |
| Enhanced Protection | This allows a member to protect the capital value of benefits built up before 6 April 2006, even if those benefits exceeded the Lifetime Allowance (LTA). Enhanced Protection was available to all individuals even if the value of their benefits was less than the LTA at 6 April 2006. Members must have registered with HMRC by 5 April 2009 for the protection to apply. For more information, visit the HMRC website: www.hmrc.gov.uk |
| Final Salary Scheme | A Scheme that provides a pension for you, and benefits for your family and/or beneficiaries on your death, based on the time for which you have paid contributions to the Scheme and your Retiring pay. |
| Fixed Protection | The Lifetime Allowance (LTA) reduces from £1.8m to £1.5m from 6 April 2012. Members can apply to HMRC by 6 April 2012 for Fixed Protection if they expect the value of their benefits to exceed £1.5m by the time they draw them. Fixed protection allows affected members to fix their LTA at £1.8m but protection can be lost if certain conditions are broken. Members with Primary and Enhanced Protection need not apply. For more detailed information visit:- http://www.hmrc.gov.uk/pensionschemes/lifetime-allowance/savings.htm#11. |
| Flying Staff | Pilots, flight engineers and air cabin crew. |
| Gross taxable pay | Your pay before tax. |
| Ill-health pension | You can draw your pension straight away if you are retired by BA because
of ill health;
or if you are a pilot or engineer officer and you lose your licence due to medical reasons before Normal Retirement Age.
If you have five or more years contributory service, we will also include half potential service to Normal If you have less than 12 months to live you may be able to receive all of your pension as a tax-free cash sum whilst continuing to provide a pension for your dependants should you die. What if I fall ill? |
| Intended Retirement Date (IRD) [Pilots only] |
This has also been known as contractual retirement date or compulsory retirement date. The Employment Equality (Age) Regulations 2006 previously gave all employees an Intended Retirement Date (IRD) of 65. The government abolished this from 1 October 2011. However, Flight Crew are governed by International Regulations and retain an IRD of 65 as determined by their contract of employment. IRD should not be confused with Normal Retirement Age. |
| Late retirement | Anytime after Normal Retirement Age |
| Lifetime Allowance (LTA) | The combined value of all your pension and Lump sum entitlements from
all UK registered pension arrangements you belong to must be compared against the LTA set for the year of your retirement.
The LTA is currently £1.8m but is expected to reduce to £1.5m from April 2012. If the total ‘value’ of all your pension benefits exceeds the LTA, tax is charged by HM Revenue & Customs on the excess, known as the Lifetime Allowance Charge. |
| Lifetime Allowance value | The value of your British Airways pension
to be compared against your LTA is worked out as 20
times your annual rate of pension. So if your BA pension at
retirement is £6000 a year and you do not take a Lump sum at your pension
commencement, the value of your pension will be worked out as: 20 x £6,000p.a. = £120,000 Or, if you take a Lump sum, the value of your pension would be worked out as the cash value of your Lump sum plus 20 times your remaining annual pension: Lump sum of £20,000 plus 20 x £4200 p.a. = £104,000. If, when drawing your BA pension, you have any other pensions already in payment, the percentage of LTA used up by those pensions must also be taken into account. Where payment of any other pensions began before 6 April 2006, the value would be worked out as 25 times the annual rate of pension in payment at the date you draw your BA pension. |
| Lifetime Allowance Protection | If the total value of all your earned pension benefits exceeds your
LTA at retirement, any benefits in excess of the LTA will be subject to
a Lifetime Allowance charge, which is payable directly to HMRC. Members could register with HMRC by 5 April 2009 to protect their benefits against the Lifetime Allowance Charge. There were two types of protection available, Primary Protection (for members whose benefits at 5 April 2006 exceeded £1.5m) and Enhanced Protection (for members who expected their benefits already built up to exceed the LTA when they retire). Members must provide BA Pensions with a copy of their original HMRC Protection certificate at retirement in order for the protection to apply. |
| Lump sum | At retirement, a one off cash payment in exchange for part of your pension. A Lump sum can also be paid if you die while still working at BA. If no Adult Survivor’s pension is payable, a Lump sum may be paid if you die in retirement or die with a deferred pension. |
| Lower pay threshold | An amount set by British Airways Plc to determine whether an Active Member may qualify for a contribution reduction from 1 October 2011. The Lower Pay Threshold has been set at £21,806 per annum from 1 October 2011 but will be reviewed by British Airways Plc from time to time. Members earning below the Lower pay threshold qualify for the full contribution rate reduction of 3% from 1 October 2011. |
| NAPS | New Airways Pension Scheme introduced in 1984. This Scheme closed on 1 April 2003 to new joiners. |
| NAPS 1 | This is a way of calculating Pensionable pay for NAPS Final Salary and BAMPS. Usually the total of the pensionable elements of your basic pay is reduced by broadly 1.5 times the Current Lower Earnings Limit for National Insurance contributions (the reduction for 2011/12 is £7,956). You can choose NAPS 1 or NAPS 2 if you are in NAPS Final Salary. |
| NAPS 2 | This is a way of calculating Pensionable pay for NAPS Final Salary. Usually the total of the pensionable elements of your basic pay reduced by 15%. NAPS2 can never produce less Pensionable pay than NAPS1. You can choose NAPS 1 or NAPS 2 if you are in NAPS Final Salary. |
| Normal Retirement Age |
This is the age (set by the Scheme) at which your pension is due in full.
For Flying Staff = age 55 For Ground Staff = 60 |
| Pensionable Dependant | This is someone who, in the opinion of the Trustees is either, at the date of your death: living with you in a relationship resembling marriage and with whom you are financially inter-dependent – such as a common-law spouse or partner; or someone who is financially dependent upon you to a substantial extent for the everyday necessities of life. See also Surviving Dependant. |
| Pensionable pay | The total of the elements of your pay (or notional elements of your pay) designated as pensionable by British Airways. |
| Pensionable service | Pensionable Service is the period you have been a member of, and paid contributions to, the Scheme and includes any time transferred from another Scheme. |
Primary Protection |
This was only available for members whose pension benefits value exceeded £1.5m at 6 April 2006 and who had registered with HMRC by 5 April 2009. Members who registered for Primary Protection are entitled to a personal Lifetime Allowance (PLTA) which is greater than the standard LTA. For more information, visit the HMRC website: www.hmrc.gov.uk. |
| Qualifying service | The time you have paid contributions to the Scheme adjusted for any changes in your BA occupations before 1 April 2007 plus any service you have transferred into the Scheme. |
| Retiring pay | This is calculated as the average of the best two years of Pensionable pay in the five years before you leave the Scheme, retire or die. |
| Scheme | APS |
| SmartAVCs | British Airways Plc's salary sacrifice arrangement for Additional Voluntary Contributions (AVCs). Instead of AVCs being deducted from your weekly or monthly pay, British Airways pays the contributions directly to your AVC Plan on your behalf and reduces your pay by exactly the same amount. By reducing your pay, both you and the Company pay reduced National Insurance Contributions (NICs). Where AVCs are paid via SmartAVCs, the Company also pays an extra amount, currently equal to 10% of your SmartAVC contribution, to your AVC Plan. Please refer to the SmartAVC Factsheet on the BA intranet for full details of the SmartAVC arrangement. |
| SmartPension | British Airways Plc's salary sacrifice arrangement. Instead of pension scheme contributions being deducted from your weekly or monthly pay, British Airways pays the contributions directly to the Scheme on your behalf and reduces your pay by exactly the same amount. By reducing your pay, both you and the Company pay reduced National Insurance Contributions (NICs). More detailed information on SmartPension can be found on the BA Intranet. |
| State Earnings Related Pension Scheme (SERPS) | Currently known as S2P. This is the earnings related part of the State pension. The APS and NAPS were contracted out of SERPS and members of APS and NAPS do not therefore pay towards, or qualify for, the S2P. |
| State pension age | The age at which you start to receive your basic State pension. For men: age 65 (rising to age 66 by October 2020) For women: - age 60, if born before 6 April 1950 - age 65, if born after 5 April 1955 (rising to age 66 by October 2020) - between age 60-65, if born between 6 April 1950 and 5 April 1955 |
| State Second Pension (S2P) | Previously known as SERPS. This is the earnings related part of the State pension. The APS and NAPS were contracted out of S2P and members of APS and NAPS do not therefore pay towards, or qualify for, the S2P. |
| Surviving Dependant | A surviving dependant is someone who was financially interdependent with you (i.e. in a relationship closely resembling marriage) at the date of your death, such as a common-law spouse or partner, or someone who is financially dependent on you for the everyday necessities of life. See also Pensionable Dependant |
| Spouse, Partner or Surviving Dependant's pension | If you pay the higher rate of contributions for the Adult Survivor’s Pension cover and you are married when you die, your legal spouse or registered civil partner will automatically qualify for a pension from the Scheme. If you have paid the higher rate of contributions for the Adult Survivor's pension and you are single when you die, a pension may be payable, at the discretion of the Trustees, to a Surviving Dependant. |
| Transfer value | The value you have built up in a pension scheme that can be transferred to another scheme. If you are transferring the value to a final salary scheme you may receive a credit to your Pensionable service. If you are transferring to a money purchase scheme, your individual account will increase by the amount of transfer. |
| Trustees | A group responsible for managing all aspects of the Scheme. The group ensures that all payments are received from BA and members at the correct rates; that these payments are suitably invested and the correct benefits are paid from the Scheme. Members elect half of the Trustees and BA appoints the other half. |
| Upper pay threshold | An amount set by British Airways Plc to determine whether an Active Member may qualify for a contribution reduction from 1 October 2011. The Upper Pay Threshold has been set at £24,532 per annum from 1 October 2011 but will be reviewed by British Airways Plc from time to time. |