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) 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

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 were 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 person can build up in a pension scheme each 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 deferred members who chose the three-year promotional/incremental pay link transitional option when NAPS closed to future pension build up on 1 April 2018. If this applies, and you have earnings (defined by HMRC as Threshold Earnings) of £110,000 or more, you may be affected by the tapered AA. See The tapered AA for more details.

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

BA

British Airways plc or any other company in the British Airways group which used NAPS to provide its employees’ pensions.

BA's contribution

BA pays whatever is necessary to provide your benefits as advised by the Scheme’s actuary.

Basic pension calculation

The calculation used to work out the pension you will receive when you retire, worked out at the earlier of the date you left NAPS or 31 March 2018.

(Pensionable Service x Retiring Pay) divided by 75.

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 NAPS.
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 grew while you were making contributions. The standard rate was 75 for all Staff from 1 October 2010.

NAPS members could choose faster Build-up rates of 1/67 or 1/60 by paying extra contributions.

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 chose 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 are added to the pension for the period since contributions stopped to date of drawing.

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

Since 6 April 2015, people with defined contribution (DC) benefits have had 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 kept their NAPS pension aside to receive at a later date.
Defined Benefit (DB) Pension built up in a final salary scheme such as NAPS as opposed to a defined contribution 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 55 and Normal Retirement Age.
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

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.
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 from the Lifetime Allowance charge. Members must have registered with HMRC before 6 April 2017 for Individual Protection 2014 to apply. Members who expected their benefits at retirement to be more than £1.25m could apply for the value of their pension benefits at 5 April 2014 to be protected up to a maximum value of £1.5m. Members with Primary Protection could not apply.

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

From April 2016, individuals who expected their benefits at retirement to be more than £1m could 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.

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.
NAPS New Airways Pension Scheme introduced in 1984. This Scheme closed on 1 April 2003 to new joiners and closed to future build up on and from 1 April 2018.
NAPS 1 This was a way of calculating Pensionable Pay for NAPS Final Salary. The total of the pensionable elements of your basic pay were reduced by broadly 1.5 times the current Lower Earnings Limit for National Insurance contributions (the reduction for 2017/18 was £8,814).
NAPS 2 This was a way of calculating Pensionable Pay for NAPS Final Salary. The total of the pensionable elements of your basic pay were reduced by 15% (up to a maximum of the NAPS1 abatement amount).
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 NAPS 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 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 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 payments would normally start.

Option 55 See Plan 60 plus Option 55.
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.

For most NAPS flying 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 were two Pensionable Pay types — NAPS 1 and NAPS 2.

BAMPS used NAPS 1.

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 prior to 1 April 2007.
Plan 65 Introduced on 1 April 2007, Plan 65 allowed NAPS members to build up pension benefits payable at a Normal Retirement Age of 65. The standard Contribution rate was 5.25%. The standard Build-up rate was 1/75 of pay for every year of Pensionable Service. Members had options to increase the Build-up rate to 1/67 or 1/60 by paying extra contributions on top of the basic contribution rate.
Plan 60

Introduced on 1 April 2007, Plan 60 allowed NAPS members to build up pension benefits payable at a Normal Retirement Age of 60. The standard Contribution rate was 8.50%. Members had options to increase the Build-up rate to 1/67 or 1/60 by paying extra contributions on top of the basic contribution rate.

Plan 60 plus Option 55

Option 55 members paid extra pension contributions on top of the standard Plan 60 rates to enable them to build up a pension to age 55 with no actuarial reduction for early payment from age 55.

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 during which you 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

For service from 01 April 2007 Retiring Pay was calculated as the average of the best two years of Pensionable Pay in the five years before you left the Scheme. A 'year' for Retiring Pay purposes was any consecutive period of 365 days but one year did not need to be consecutive with another.

For service up to 31 March 2007, Retiring Pay was worked out as above but calculated at the earlier of your old Normal Retirement Age (55 - flying staff, 60 - ground staff) or the date you left. If you were already over your old Normal Retirement Age on 31 March 2007, your Retiring Pay in respect of the pension earned before 31 March 2007 was calculated at 31 March 2007.

Scheme The New 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.
State Earnings Related Pension Scheme (SERPS) Currently known as S2P. This is the earnings related part of the State pension. NAPS was contracted out of SERPS and members of NAPS 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 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. NAPS was contracted out of S2P and members of NAPS 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, New Airways Pension Scheme Trustee Ltd. The Trustee Directors ensure that payments are received from BA 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.