Actuary

A professional adviser to the Trustee 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 Scheme.

Additional Voluntary Contributions (AVCs)

Extra tax-free contributions (if you made them) on top of your standard BA pension to provide additional benefits for you and your dependants when you retire or die.

Adjusted income

Adjusted income is broadly taxable income plus the annual allowance value of pension savings.

Adult Survivor’s pension

Adult Survivor's pension: The basic pension includes a pension for your spouse or partner when you die (if you paid for this cover). The Adult Survivor's pension is 2/3rds of the member's pension for all service for which Adult Survivor's pension cover contributions have been paid.

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 Trustee to consider their dependant for a discretionary pension. See Surviving Dependant for more details.

Assets

The total market value of the investments and cash held by the Scheme, built up from contributions made by BA and the Scheme members plus investment returns.

BA

British Airways plc or any other company in the British Airways group

BAPP

The British Airways Pension Plan. Originally available for BA employees who were employed after 1 April 2003. BA employees who are not members of APS can save for their retirement by applying to join BAPP for future service. BAPP is also BA's arrangement for auto-enrolment – a legal requirement whereby BA must automatically enrol employees who have not joined one of the BA pension schemes (or who have been opted out of APS for more than 12 months) into BAPP every three years. British Airways' auto-enrolment date occurs every three years starting 1 January 2013. BAPP is administered by an external company, Aviva Life & Pensions.

APS members may opt-out of APS and join BAPP if they wish but the contributions paid by BA may be restricted if the member has 20 years or more pensionable service in APS. For more information about BAPP visit the BA intranet.

BA's contribution

In addition to members' contributions, BA pays whatever is necessary to provide your benefits as advised by the Scheme’s actuary.

BlackRock

Appointed June 2021 as the asset manager to manage the day to day investment of the pension Scheme’s assets including BA’s and member payments into APS and NAPS.

British Airways Money Purchase Section (BAMPS)

BAMPS is the Money Purchase Section of NAPS, which closed to future contributions on 1 October 2012. The contributions made by members and BA up to 30 September 2012 were invested and continue to grow with interest. At retirement BAMPS members can decide the type of pension to buy with the money invested in their individual BAMPS retirement account or they can take your 'pot' as a cash lump sum. 

British Airways Pension Services Ltd (BAPSL)

An independent company which runs the Schemes on a day-to-day basis, including calculating and paying benefits, and communicating with members.

Buy-in

An insurance policy that covers a proportion of a pension scheme’s liabilities and is held as an asset of the pension scheme. The scheme pays a premium to an insurance company in return for the policy, and the policy pays an income that is related to the liabilities insured. This removes the risk that the value of a scheme’s assets won’t be enough to meet future liabilities. The Trustee and BA have ultimate responsibility for making sure the Scheme can meet members’ benefits.

Buy-out

An insurance policy which replaces a pension scheme’s obligations to pay members’ pensions with individual annuity policies between the insurer and each member. The policy will reflect the benefits provided under the pension scheme.

Contracting-out

The ability for occupational pension schemes, prior to 6 April 2016, to opt out of the earnings related State Pension in return for lower employee and employer National Insurance Contributions. The Scheme must ensure the pension is at least the amount of pension a member would have built up in the earnings related part of the State Pension from age 65 (men) or age 60 (women).

Covenant

The financial strength of the participating employers of defined benefit pension schemes. As appropriate, the Trustee Directors seek advice on the financial strength of BA plc to meet its pension obligations.

Current single person's Basic State Pension

The basic pension received from the Government for individuals who reach their State Pension Age before 6 April 2016. New Government pension arrangements apply if you reach your State Pension Age on or after 6 April 2016. See 'The Government gives' for more details.

DC Flexibilities

From 6 April 2015, people with defined contribution (DC) benefits have greater flexibility on how they access their pension savings from age 55. AVCs you have paid into the Scheme are DC benefits, but you will have to transfer your AVCs out of the Scheme to one or more different pension providers if you want to access them under the Government’s flexible access rules.

You can choose to transfer just your AVCs out of the Scheme or you may choose to transfer your main Scheme pension out as well. Before transferring benefits out of the Scheme you should get free guidance from Pension Wise (www.pensionwise.gov.uk) to make sure any new arrangements meet your needs and that you fully understand how this will affect any tax you have to pay.

The full range of DC options is complex and the suitability of the options depends on the size of an individual's DC pot and retirement income requirements.

Deferred member

A member who no longer makes contributions to the Scheme or has left BA and kept aside their BA pension to receive at a later date.

Deficit

The difference between the value of a scheme’s assets and its liabilities if the value of the assets is not enough to cover the scheme’s liabilities. Deficits are also sometimes referred to as shortfalls.

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 physically or mentally incapacitated to the extent that they cannot earn a living.

Early retirement age

Anytime between Normal Minimum Retirement Age (NMPA), as set by the Government, and Normal Retirement Age. NMPA is currently age 55, but from 6 April 2028 the NMPA will increase to age 57, unless a person qualifies for a Protected Pension Age (PPA). See NMPA for further information.

Enhanced Protection

Final Salary Scheme

A Scheme written under trust 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

A form of protection available as the Lifetime Allowance (LTA) was reduced. The Government replaced the LTA with three new allowances with effect from 6 April 2024. These were the Lump Sum Allowance; Lump Sum and Death Benefit Allowance (LSDBA); and the Overseas Tax Allowance (OTA). Existing LTA protections are maintained, and increase the new allowance levels.

Detailed guidance about this form of protection is available on the HMRC website: visit www.gov.uk/hmrc-internal-manuals/pensions-tax-manual.

Flying Staff

Pilots, flight engineers and air cabin crew.

Funding level

This measures a scheme’s progress towards having enough money to pay all promised benefits. The funding level is given as a percentage and is calculated by dividing the assets by the liabilities.

GMP Age

This is age 60 for women and age 65 for men and is the age from which the Scheme must provide any Guaranteed Minimum Pension (GMP). If your pension is already being paid to you when you reach GMP age, the pension increases paid by the Scheme will change from this date.

Governance

Governance is the term used to describe how organisations are directed, controlled and led.

Guaranteed Minimum Pension (GMP)

For any pensionable service completed between 6 April 1978 and 5 April 1997, the Scheme must promise to pay you at least a minimum amount of pension when you reach age 65 (men) or age 60 (women), called the Guaranteed Minimum Pension (GMP). This is a condition of the Scheme having been contracted out of the State Second Pension (formerly the State Earnings Related Pension Scheme (SERPS)) until 5 April 2016. The GMP is included in your Scheme pension.

Individual Protection

A form of protection available as the Lifetime Allowance (LTA) was reduced. The Government replaced the LTA with three new allowances with effect from 6 April 2024. These were the Lump Sum Allowance; Lump Sum and Death Benefit Allowance (LSDBA); and the Overseas Tax Allowance (OTA). Existing LTA protections are maintained, and increase the new allowance levels.

Detailed guidance about this form of protection is available on the HMRC website: visit www.gov.uk/hmrc-internal-manuals/pensions-tax-manual.

Investment risk

The risk of investments not performing as well as expected or the value of the assets changing by a different amount to the liabilities, which would result in a higher deficit. Investment risk tends to be higher in certain assets (such as equities, illiquid assets and property, known as return-seeking assets) than others (such as Government bonds and cash, known as liability-matching assets).

Late retirement

Drawing your pension after your Normal Retirement Age.

Liabilities

The value placed on expected future benefit payments and expenses, calculated using actuarial methods and assumptions.

Liability-matching assets

These are investments which have similar characteristics to a pension scheme’s liabilities, for example, income that matches the scheme’s expected benefit payments.

Lifetime Allowance (LTA)

The Lifetime Allowance was the limit on the combined value of all pension and lump sum entitlements from all UK registered pension arrangements people belonged to. The Government replaced the LTA with three new allowances with effect from 6 April 2024. These were the Lump Sum Allowance; Lump Sum and Death Benefit Allowance (LSDBA); and the Overseas Tax Allowance (OTA).

Lifetime Allowance value

The value of your British Airways pension benefits to be compared against your LTA. This is worked out as 20 times your annual rate of pension, e.g. 20 x £6,000 p.a. = £120,000.

Or, if you take a lump sum, the LTA value would be the cash value of your lump sum plus 20 times your remaining annual pension: lump sum of £20,000 plus 20 x £4,200 p.a. = £104,000.

If, when drawing your BA pension, you have 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.

Longevity insurance

Insurance policies that protect a pension scheme from longevity risk, in return for an agreed schedule of insurance premium payments to an external insurance company.

Longevity risk

The risk that a pension scheme will need to pay pensions for longer than expected, due to increasing life expectancy.

Lower Earnings Limit (LEL)

The Lower Earnings Limit is set each tax year by the Government. It is the amount of earnings which allow an employee to qualify for certain state benefits (such as qualifying years for the basic state pension).

Lump sum

At retirement, a one-off, tax-free payment – from your AVCs, if you have them and/or in exchange for part of your pension. A lump sum can also be paid if you die if certain conditions are met.

Lump Sum Allowance (LSA)

The LSA is a limit introduced by the Government on 6 April 2024 on the total amount of lump sum a person take as part of their retirement. The LSA is currently set at £268,275.The maximum lump sum a member can take when their pension commences is 25% of the value of the pension benefits being drawn, up to this limit.

Lump Sum and Death Benefit Allowance (LSDBA)

The LSDBA is a limit introduced by the Government on 6 April 2024 on any lump sums payable upon death or serious ill health. The LSDBA is currently set at £1,073,100. The total value of any lump sum death benefits paid out upon death cannot exceed this limit.

New State Pension

A new, single-tier State Pension replaced the Basic State Pension and earnings related State Pensions for men born after 6 April 1951 and women born after 6 April 1953 and who will therefore have reached State Pension Age on or after 6 April 2016.

To get any new State Pension, you will usually need at least 10 qualifying years (years in which National Insurance (NI) contributions have been paid or NI credits received), and for the full amount you need to have 35 qualifying years.

Visit the Government website www.gov.uk/state-pension to learn more about the State Pension.

As APS and NAPS were contracted-out of the State earnings related pension arrangements, a deduction is made for periods of contracted-out service. The adjustments to the State Pension are complicated and vary for each member.

Your starting amount will be the higher of:

1. your State Pension built up under the old system (up to April 2016) (Basic State Pension plus any State Earnings Related Pension (SERPS) or State Second Pension you built up whilst not a member of APS or NAPS and paying National Insurance contributions) or;
2. the new State Pension for qualifying years to April 2016 adjusted for past contracted-out service.

Individuals still have the opportunity to build up new State Pension for service from April 2016 if their State Pension at April 2016 was less than the full new State Pension. You can get a State Pension forecast at www.gov.uk/check-state-pension.

Normal Minimum Pension Age (NMPA)

The NMPA is set by the Government and is age 55. From 6 April 2028, NMPA will increase from 55 to 57, unless a person qualifies for a Protected Pension Age (PPA). All flying staff who were active members before 1 April 2007 and either left the company or stopped contributing to the Scheme when NAPS closed on 31 March 2018 qualify for a PPA, allowing them to take their pension from age 55. Ground staff do not qualify for a PPA.

Normal Pension Age (NPA)

This is the age (set by the Scheme), at which your pension payments would normally start and due in full. This is also known as Normal Retirement Age (NRA).

Normal Retirement Age (NRA)

This is the age (set by the Scheme) at which your pension payments would normally start and due in full. This is also known as Normal Pension Age (NPA).

Overseas Tax Allowance (OTA)

This is a limit on the benefits paid to a Qualifying Recognised Overseas Pension Scheme (QROPS) following a transfer out of the Scheme. The OTA is currently set at £1,073,100. This means any transfer value above this limit will be subject to a 25% overseas transfer charge. Transfers to UK-registered pension schemes are not affected.

Pension Increases

Pensions paid from Part 6 of APS and NAPS increase each year in line with the rate specified within the Government’s Pension Increase (Review) Orders (PIRO). Currently PIRO is based on the rise in the Consumer Price Index (CPI) over the twelve months from September to September each year. NAPS are limited to a maximum of 5% per year.

The APS Trustee Directors have a power to pay increases in addition to those set out in the PIRO if, after taking professional advice, they agree this to be appropriate.

Pension Wise

Pension Wise is a Government service from MoneyHelper that offers free, impartial pensions guidance about defined contribution pension options (including AVCs).

An appointment with Pension Wise is free and will help you understand what your overall financial situation will be when you retire.

Pensionable Dependant

At the date of a member’s death this is someone who, in the opinion of the Trustee, is either:

• 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. There are special eligibility conditions for a child of a deceased member who is over age 23.

See also Surviving Dependant

Primary Protection

A form of protection available as the Lifetime Allowance (LTA) was reduced. The Government replaced the LTA with three new allowances with effect from 6 April 2024.These were the Lump Sum Allowance; Lump Sum and Death Benefit Allowance (LSDBA); and the Overseas Tax Allowance (OTA).Existing LTA protections are maintained, and increase the new allowance levels.

Detailed guidance about this form of protection is available on the HMRC website: visit www.gov.uk/hmrc-internal-manuals/pensions-tax-manual.

Qualifying service

The time you have paid contributions to the Scheme adjusted for any changes in your BA occupations plus any service you have transferred into the Scheme.

Responsible Investment (RI)

An investment strategy and practice which considers both financial returns and environmental, social and governance (ESG) factors.

Return-seeking assets

These are investments which aim to increase the value of a pension scheme’s investments (capital growth) with a lower income stream and typically produce higher returns over the long term, but with a higher level of investment risk.

Small pot lump sum

A one-off lump sum paid instead of regular pension payments in respect of a pension which has a cash equivalent value of less than £10,000 (currently approximately £500 a year pension). All pension rights including survivor’s benefits (e.g. any spouse or partner pension and dependent child allowances that may apply) are given up.

Solvency position

The actuary estimates how much an insurance company would charge to take over responsibility for paying all of a pension scheme’s benefits, for example, if the Scheme was wound up (ended). Comparing this estimate with the value of the Scheme’s assets gives the solvency position.

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 Trustee, to a Surviving Dependant.

State Earnings Related Pension Scheme (SERPS)

Currently known as S2P. This is the earnings related part of the State pension. APS and NAPS were contracted out of SERPS and members of these Schemes did not therefore pay towards, or qualify for, the S2P. Contracting-out was abolished from 6 April 2016 with the introduction of the New State Pension.

State Pension

A pension paid by the Government to individuals who have paid sufficient National Insurance contributions over their working lives.

State Pension Age

The age at which you start to receive your basic State pension. Originally State Pension Age was age 65 for men and age 60 for women. State Pension Age increased to age 66 for both men and women by October 2020 and will then rise to 67 between 2026 and 2028. Current legislation will change the State Pension Age to age 68 from 2046. You can find out your actual State Pension Age by using the State Pension Age calculator on the www.gov.uk website

State Second Pension (S2P)

Previously known as SERPS. This is the earnings related part of the State pension. APS and NAPS were contracted out of S2P and members of these Schemes did not therefore pay towards, or qualify for, the S2P. Contracting-out ended on 5 April 2016 with the introduction of the new State Pension.

Statement of Investment Principles (SIP)

A document which sets out the investment principles that govern decisions about a pension scheme’s investments. We must prepare the SIP under the Pensions Act 1995. A copy of the SIP is available on the 'Scheme Information' page.

Surplus

The difference between the value of a pension scheme’s assets and its liabilities, if the value of the assets is higher than its liabilities.

Surviving Dependant

A surviving dependant who, in the opinion of the Trustee, 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. Where a member’s pension commenced after 1 July 2008, an adult child can only qualify for the Adult Survivor’s pension if they are over the age of 23 and are physically or mentally impaired. See also Pensionable Dependant.

Technical Provisions (TPs)

A method of calculating the Scheme’s liabilities which uses assumptions we have agreed with BA. By law, these assumptions must be prudent.

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 in your new scheme. If you are transferring to a money purchase scheme (also known as a defined contribution scheme), your individual account will increase by the amount of transfer.

Trivial commutation lump sum

A one-off lump sum paid in lieu of a pension with a cash value of more than £10,000 but where the total value of all pensions from UK-registered schemes have a value of less than £30,000 (broadly equivalent to a pension of around £1,500 a year or less).