Glossary

Term Meaning
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) You can make extra tax-free contributions 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.
Adjusted income Adjusted income is broadly taxable income plus the annual allowance value of pension savings.
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.

Annual Allowance (AA)

Set by HM Revenue and Customs. The maximum value of benefit a member can build up in a tax year without incurring a tax charge. The AA is currently £40,000.

From 6 April 2016 a 'Tapered AA' was introduced, which may affect active members who have earnings (defined by HMRC as Threshold Earnings) of £110,000 or more. See The tapered AA for more details.

The Money Purchase Annual Allowance (MPAA) will apply if you choose to access any defined contribution (DC) pension savings from an external arrangement whilst you are still a member of APS. See The Money Purchase AA for more details.

See The Annual Allowance (AA) page for more information about the AA.

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 to provide its employees’ pensions.

BA's contribution

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

Band Earnings

Your total pay within a band set by the government each year, currently between £5,876 and £40,040. From 6 April 2016 members under State Pension Age, who have not selected the 1/54 (Flying Staff) or 1/58 (Ground Staff) pension build-up rate, pay an additional pension contribution of 3.1% of the Band Earnings. This was introduced by the Company following the launch of the government’s new State Pension arrangements from April 2016.

BARP

The British Airways Retirement 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 BARP for future service. BARP 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 BARP every three years. British Airways' auto-enrolment date occurs every three years starting 1 January 2013. BARP is administered by an external company, Willis Towers Watson.

APS members may opt-out of APS and join BARP 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 BARP visit the BA intranet.

Basic pension calculation

The calculation used to work out the pension you will receive when you retire.

(Pensionable Service x Retiring Pay) divided by build-up rate 52 for Flying Staff or 56 for Ground Staff.

British Airways Pension Investment Management Ltd (BAPIML) An independent company which, on behalf of the Trustee, manages the day-to-day investment of the pension Scheme’s assets including BA's and members' payments into APS.
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 in the Scheme while you are paying contributions. The standard rate is 52 for Flying Staff and 56 for Ground Staff.

APS members who are under their State Pension Age can also choose to pay less to build their pension at a slower build-up rate of 1/54 (Flying Staff) or 1/58 (Ground Staff). Members will pay the same contributions that they would pay for the standard build-up rate of 1/52 (Flying Staff) or 1/56 (Ground Staff) but BA will cover the cost of the additional employer’s National Insurance Contributions (NICs), currently 3.1% of Band Earnings, passed onto members by the Company following the launch of the government’s new State Pension arrangements from April 2016.

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.
Covenant The financial strength of the participating employers of defined benefit pension schemes. PwC have been engaged by the Trustee since 2006 to undertake the extensive investigations into BA’s financial strength that are required.
Crystallised member

A member who has chosen to stop paying contributions to the Scheme at or after Normal Retirement Age but has left their pension aside for drawing at a later date. Late retirement uplifts will be added to the pension for the period since contributions stopped to date of drawing. This should always be compared with the automatic position of continuing to pay into the Scheme and building up future service benefits.

A crystallised member continues to be covered for the death-in-service lump sum benefit and may save AVCs if they wish (this can affect Pension Input for the Annual Allowance).

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 has opted out of the Scheme or has left BA and kept aside their BA pension to receive at a later date.
Defined Benefit (DB) This is pension benefit built up in a final salary scheme such as APS as opposed to a money purchase scheme.
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 age 50 and Normal Retirement Age. The minimum retirement age of 50 continues to apply to members of APS who leave BA and draw all their Scheme benefits at the same time. An APS member who opts out of the Scheme or wishes to take Flexible Retirement 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

A form of protection from the Lifetime Allowance charge. Members must have registered with HMRC by 5 April 2009 for the protection to apply. You must tell us if this protection applies to you.

For more information, visit the HMRC website: www.hmrc.gov.uk

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 from the Lifetime Allowance (LTA) charge. Members must have registered with HMRC by 6 April 2012 for Fixed Protection 2012 (FP12) to apply; by 6 April 2014 for Fixed Protection 2014 (FP14) to apply; or by 5 April 2016 for Fixed Protection 2016 (FP16) to apply. FP12 provides members with a personal LTA of £1.8m; FP14 provides a personal LTA of £1.5m; FP16 provides members with a personal LTA of £1.25m. Fixed protection can be lost if certain conditions are broken.

For more detailed information visit: www.hmrc.gov.uk

Flexible Retirement An option allowing employees one opportunity at any time from age 55 to obtain company consent to permanently reduce their working hours and at the same time to draw all or part of their pension while still building up further pension for future service. Special rules apply to ‘crystallised members’. See the Flexible Retirement Information Leaflets on the I'm thinking of retiring page for full details.
Flying Staff Pilots, flight engineers and air cabin crew.
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) entitlement. 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.
Gross taxable pay Your pay before tax. Your gross taxable pay can include: overtime, allowances, bonuses and other pay variations (such as company performance share plans and deferred share plan awards). If you save SmartAVCs as a percentage of your gross taxable pay, any of the above elements of pay which you receive in a pay period will form part of the gross taxable pay figure used to work out your SmartAVC amount.
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.
Ill-health pension

You can draw your pension straight away if you qualify and are retired by BA because of ill health; or if you are a pilot and you lose your licence due to medical reasons before Normal Retirement Age.

If retiring from contributory service, we will also include half potential service from your date of retirement 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). If you are currently building your pension up at the standard build-up rate of 1/52 (Flying Staff) or 1/56 (Ground Staff) this portion of your pension is calculated using your standard build-up rate.

If you are currently building your pension up at the lower rate of 1/54 (Flying Staff) or 1/58 (Ground Staff), this portion of your pension will be calculated using the lower build-up rate.

If you have less than 12 months to live you may be able to receive your entire pension as a tax-free cash sum whilst continuing to provide a pension for your dependants should you die. See What if I fall Ill? for more details.

Individual Protection

A form of protection from the Lifetime Allowance charge. Members must register with HMRC before 6 April 2017 for Individual Protection 2014 to apply. Members who expect their benefits at retirement to be more than £1.25m can apply for the value of their pension benefits at 5 April 2014 is protected up to a maximum value of £1.5m. Members with Primary Protection cannot apply.

Detailed guidance about IP14 is available on the HMRC website: visit www.gov.uk

From April 2016, individuals who expect their benefits at retirement to be more than £1m can apply to protect the value of their pension benefits at 5 April 2016 up to £1.25m. For more details see www.hmrc.gov.uk/pensionschemes/pension-savings-la.htm.

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 Drawing your pension after your 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 you draw your benefits.

The LTA is £1.03 million from 6 April 2018.

If the total ‘value’ of all your pension benefits exceeds the LTA (or your remaining LTA if you have previously drawn some of your benefits), tax is charged by HM Revenue and Customs on the excess, known as the Lifetime Allowance Charge.

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.

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 we will deduct from your pension benefits and pay directly to HMRC.

Four types of protection exist, Primary Protection, Enhanced Protection, Fixed Protection (2012, 2014 and 2016), and Individual Protection (2014 and 2016).

Members must provide BA Pensions with a copy of their original HMRC Protection certificate at retirement, or the protection number in respect of the 2016 protections, in order for the protection to apply.

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 while still working at BA (but not if you have opted out of the Scheme). 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.
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 reach 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.

The full new State Pension from April 2018 is £164.34 a week.

However, as APS was 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 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 is less than the full new State Pension. You can get a State Pension forecast at www.gov.uk/check-state-pension.

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

At the date of your 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.

Pensionable Pay

The total of the elements of your pay (or notional elements of your pay) designated as pensionable by British Airways. Active members were offered a one-off option to irreversibly 'unfreeze' pensionable pay up to the level of inflation. Active Members could take up the option by 31 December 2014 in return for additional contributions of 4.5% of pensionable pay. The contribution level will be reviewed at each Scheme 3-yearly actuarial valuation – but is capped at a maximum level of 4.5%. Pensionable pay for GSS staff who participated in the GSS Option is increased in line with the original GSS agreement made in 2003.

Pensionable Service

Pensionable Service is the period you have been a member of the Scheme for which contributions have been paid. This includes any time transferred from another Scheme and adjustments for periods of part time employment or changes in occupational

category.
Primary Protection

A form of protection from the Lifetime Allowance charge. Available for members whose pension benefits value exceeded £1.5m at 6 April 2006. Members had to register with HMRC by 5 April 2009 for this form of protection to apply. 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 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. A 'year' for Retiring Pay purposes is any consecutive period of 365 days but one year does not need to be consecutive with another.

Scheme The Airways Pension Scheme.
Small 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.
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 account on your behalf and reduces your pay by exactly the same amount. By reducing your pay, both you and BA pay reduced National Insurance Contributions (NICs). Where AVCs are saved via SmartAVCs, the Company also pays an extra amount, currently equal to 10% of your SmartAVC contribution, to your AVC account. 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 BA 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. APS is contracted out of SERPS and members of APS do not therefore pay towards, or qualify for, the S2P. Contracting-out will be 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 will increase to age 66 for both men and women by October 2020 and will then rise to 67 by 2028. Current legislation will change the State Pension Age to age 68 from 2046 but the government has proposed to escalate the change to age 68 from the mid-2030's and increase it to age 69 by the 2040's. State Pension Age will be also linked to any further rises in life expectancy. 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 was contracted out of S2P and members of APS 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.
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.
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.
Trivial commutation lump sum A one-off lump sum paid in lieu of a pension with a cash equivalent value of more than £10,000 but where the total value of all pensions from UK-registered schemes have an Lifetime Allowance value of less than £30,000 (broadly equivalent to a pension of around £1,500 a year or less).
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 instead of regular pension payments in respect of a pension which has a cash value of more than £10,000 but where the total value of all pensions from UK-registered schemes have a Lifetime Allowance value of less than £30,000 (currently approximately pensions of around £1,500 a year or less). All pension rights including survivor's benefits are given up.
The Trustee Directors The Trustee Directors are responsible for managing all aspects of the Scheme through a Corporate Trustee, Airways Pension Scheme Trustee Ltd. The Trustee Directors ensure that all payments are received from BA and members at the correct rates; that these payments are suitably invested and that the correct benefits are paid from the Scheme. Members elect half of the Trustee Directors and BA appoints the other half.