|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 £60,000.
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 £200,000 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.
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.
British Airways plc or any other company in the British Airways group which used NAPS to provide its employees’ pensions.
BA pays whatever is necessary to provide your benefits as advised by the Scheme’s actuary.
|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.
You can read more about BAMPS here.
|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.
|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 Pension 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.|
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.
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.
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 exactly the benefits provided under the pension scheme. As funding levels improve and pension schemes continue to mature, many schemes see buy-outs as the final step in reducing the risks involved in pensions.
|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.|
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.|
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.|
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.
|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.|
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.|
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.|
|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) 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.|
|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.|
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.
|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)||
It was the combined value of all pension and lump sum entitlements from all UK registered pension arrangements people belonged to, and had to be compared against the LTA set for the year you decided to draw your benefits.
Until 5 April 2023, a Lifetime Allowance tax charge was due on any pension benefits above the LTA. From 6 April 2023, the requirement to pay this tax charge was removed by the Government.
|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||
Before the LTA tax charge was removed in April 2023, if the total value of all your earned pension benefits exceeded your LTA at retirement, any benefits in excess of the LTA were subject to a Lifetime Allowance charge, which was deducted from your pension benefits and paid directly to HMRC.
The requirement to pay a Lifetime Allowance tax charge on any benefits that exceed a protected LTA was removed by the Government from 6 April 2023.
|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 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 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 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:
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 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.|
At the date of your death this is someone who, in the opinion of the Trustee, is either:
See also Surviving Dependant.
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 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 occupationalcategory 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.|
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.
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.
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.|
|Responsible Investment (RI)||
An investment strategy and practice which considers both financial returns and environmental, social and governance (ESG) factors.
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.
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.
|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.|
|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.|
|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.|
|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 documents' page.|
|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 but the government has proposed to escalate the change to age 68 for people born after 6 April 1970. 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.|
|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.|
|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.|
|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 cautious.|
|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.|