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 dependant | A person other than your spouse, partner or dependent children who you want to receive a pension when you die after retiring. |
| Additional Voluntary Contributions (AVCs) | You can make extra tax-free payments on top of your BA scheme to provide additional benefits for you and your dependants when you retire, die or leave the scheme. |
| 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 60. For Money Purchase = what you receive depends on the money in your individual BAMPS account including yours and BA's contributions and interest. |
| 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. The standard rate is 60 for all 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 one would receive from the government. This changes each year. The 2009-2010 basic state pension is £5,077.80 per year. |
| 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 and cannot earn a living. |
| Early retirement age | Anytime between age 55 and Normal retirement age. |
This was available to all individuals even if the value of their benefits was less than the Lifetime Allowance (LTA) at 6 April 2006. Members must have registered for Enhanced Protection by 5 April 2009 to protect the capital value of their benefits built up to 6 April 2006. Benefits can still be built up in a final salary arrangement (such as APS and NAPS) as long as those benefits at retirement do not exceed an ‘appropriate limit’. The appropriate limit is the higher of (a) the value of benefits at 6 April 2006, revalued by the higher of 5%, Retail Price Index (RPI) or an amount to be determined by the Government; or (b) the value of benefits recalculated using service at 6 April 2006 but pay and age at retirement. If the appropriate limit is exceeded because a member has built up excessive benefits after 6 April 2006, enhanced protection would be lost and the whole of the value of the member’s pension benefits would be compared against the LTA at that point and tax will be payable on the excess. Future build up of defined contribution benefits (such as AVCs) after 6 April 2006 is not permitted under enhanced protection. If a member has paid AVCs since 6 April 2006, enhanced protection would not then be available. For more information or to obtain a form, visit the HMRC website: www.hmrc.gov.uk |
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| 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 you have been in the Scheme and your Retiring pay. |
| Flight Staff | Pilots, 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 a medical incapacity from which, in the opinion of BA’s medical adviser, you will not recover in the foreseeable future and this prevents you from carrying out your normal duties even after reasonable adjustment, or prevents you from carrying out appropriate alternative employment where this is offered by the Company;
or if you are a pilot or engineer officer and you lose your licence due to medical reasons before Normal retirement age.
Appropriate alternative employment means employment which, in the opinion of the Company, is suitable and reasonable employment taking account of your skills and current salary level.
If you have five or more years contributory service, we will also include half potential service to Normal retirement age or age 63 if you were Ground Staff on 1 December 1989, have no breaks in service and are still Ground Staff when you retire on ill-health grounds. |
| Intended Retirement Date (IRD) | The Employment Equality (Age) Regulations 2006 gives all ground employees and cabin crew an intended retirement date (IRD) of 65. |
| Late retirement | Anytime after Normal retirement age |
Lifetime Allowance (LTA) |
From 6 April 2006 the previous limits on maximum pension benefits were replaced with one simple limit for all, called the ‘Lifetime Allowance’ (LTA). The combined value of all your pension and Lump sum entitlements from all pension schemes you belong to must be compared against the lifetime allowance set for the year of your retirement. The lifetime allowance has been set until 2010/11, as follows: Tax year Lifetime Allowance * The Government has indicated that 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 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: 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. For most people the value of their total pension benefits will fit within the lifetime allowance. If your BA pension (or the combined value of your BA pension and any other pensions that are already being paid to you) exceeds your available Lifetime Allowance, then the excess benefits will incur a lifetime allowance charge. If, when drawing your BA pension, you also have any pensions where payment began before 6 April 2006, then these must also be valued and taken into account. 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 the LTA, any benefits in excess of the LTA will be subject to a Lifetime Allowance charge.
HM Revenue & Customs has special transitional arrangements in place to allow members who had built up benefits in excess of the LTA at 6 April 2006, to protect them against the tax charge. There are two types of protection available, Primary Protection and Enhanced Protection. Members needed to apply direct to HM Revenue & Customs before 5 April 2009 in order to register for protection. |
| 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 spouse or partner pension is payable, a Lump sum may be paid if you die in retirement or die with a deferred pension. |
| 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 single person's Basic State Pension (the reduction for 2010/2011 is £7,566). 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 you would normally stop working and start your retirement. This is not to be confused with intended retirement date. NAPS has a choice of two Normal retirement ages, 65 (Plan 65), or 60 (Plan 60). |
| Option 55 | See Plan 60 plus Option 55 |
| Pensionable pay | The elements of your pay (or notional elements of your pay) designated as pensionable by British Airways.
For most NAPS flight staff, pensionable pay was increased by 18.75% for service after 1 April 2007 as part of the overall NAPS changes implemented in April 2007. For NAPS, there are 2 Pensionable pays - NAPS1 and NAPS2. BAMPS uses NAPS1. |
| Pensionable service | Pensionable Service is the period you have been a member of the Scheme including any time transferred from another scheme.
In NAPS Pensionable service is split into ‘past Pensionable service’ built up to 31 March 2007 and ‘future Pensionable service’ built up from 1 April 2007 |
| Plan 65 | Introduced on 1 April 2007, Plan 65 allows you to build up pension benefits which will be payable at a Normal retirement age of 65. The standard Contribution rate is 5.25% and the standard Build-up rate is 1/60th. Members have options to increase the Build-up rate to 1/56th or 1/52nd by paying extra contributions of 3% or 6%. Members of Plan 65 have a yearly opportunity to join Plan 60 for future service. Once in Plan 60, you cannot return to Plan 65. |
| Plan 60 | Introduced on 1 April 2007, Plan 60 allows you to build up pension benefits which will be payable at a Normal retirement age of 60. The standard Contribution rate is 8.5% and the standard Build-up rate is 1/60th. Members have options to increase the Build-up rate to 1/56th or 1/52nd by paying extra contributions of 3% or 6%Once in Plan 60, you cannot join/rejoin Plan 65. Members of Plan 60 have a yearly opportunity to pay extra contributions towards Option 55. |
| Plan 60 plus Option 55 | Introduced on 1 April 2007, Option 55 allows members of Plan 60 to pay extra pension contributions of 9% to enable them to build up a pension to age 55 and to have the actuarial reduction, which would usually be applied for early payment, waived. Option 55 is not available within Plan 65. |
Primary Protection |
This is only available for members whose pension benefits value exceeded the LTA at 6 April 2006. Members registering for Primary Protection would be 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. Members needed to apply direct to HM Revenue & Customs before 5 April 2009 in order to register for protection. |
| Qualifying service | The time you have been in the Scheme adjusted for any changes in your BA occupations plus any service you have transferred into the scheme. |
| Retail Price Index (RPI) | The index used to measure changes in the price of regular household goods over a specific period. |
| Retiring pay | This is calculated as the average of the best two Pensionable pay figures in the five years before you leave the scheme, retire or die.
In NAPS, for past service to 31 March 2007 Retiring pay is calculated at the earlier of your old Normal retirement age (55 flight staff 60 ground staff) or the date you leave, retire or die. In NAPS, for future service from 1 April 2007, Retiring pay is calculated when you leave, retire or die. For NAPS flight staff an enhanced Pensionable pay figure is used in the Retiring pay calculation for future service only. If you were already over your old Normal retirement age on 31 March 2007 Retiring pay for past service is calculated at 31 March 2007. |
| Scheme | NAPS Final Salary or NAPS BAMPS. |
| Spouse/partner pension | The basic pension from the Final Salary scheme includes a pension for your spouse or partner when you die. You can also arrange a spouse/partner pension from your individual BAMPS account when you retire. See also Surviving Dependant. |
| State Earnings Related Pension Scheme (SERPS) | Currently known as S2P. This is the earnings related part of the State pension and can be paid in addition to the basic State pension. |
| State pension age | The age at which you start to receive your basic State pension. For men: age 65 For women: - age 60, if born before 6 April 1950 - age 65, if born after 5 April 1955 - 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 and can be paid in addition to the basic State pension. |
| Surviving Dependant | A surviving dependant is someone who was financially dependent on you at the date of your death, such as a common-law spouse, partner or someone who is financially dependent on you for the everyday necessities of life. |
| Surviving Dependant's pension | If you pay the higher rate of contributions for the Adult Survivor’s Pension cover 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. |