BA Pensions have now made available the 2020 Summary Funding Statements for APS & NAPS. These are available from the Scheme Documents page for each scheme:
Both schemes show a decrease in scheme funding from 31st March 2019 to 31st March 2020.
APS had an £881m surplus in 2019, in 2020 this had decreased to £381m. The downturn in the Scheme’s funding position over the year to 31 March 2020 was largely due to the cost of pension increases awarded under the 2019 settlement agreement, the cost of the 2020 discretionary increase awarded, and updated expectations of future inflation.
NAPS had a £1,880m deficit in 2019 and this increased to £2,643m in 2020. Investment returns were much lower than expected over the year, made worse by falls in interest rates and lower expectations of future investment returns. As a result, the Scheme needs to hold more assets to make sure it can meet future benefit payments. Although closed to future accrual, BA paid in contributions of £706 million, partially balancing out negative investment conditions over the year.
APS & NAPS are currently undergoing the formal actuarial valuation process which is carried out every three years. The results of this valuation are expected later in 2021.
These are challenging times for all pension schemes and the figures largely predate any effects of the Coronavirus pandemic, which started to impact financial markets in February 2020. APS has carried out a comprehensive de-risking strategy so the pandemic has had a limited effect on its funding position. NAPS is more exposed to the market forces and the sudden reduction in asset values caused by the pandemic resulted in the drop in the NAPS funding position. Since March 2020, markets have improved and so has the corresponding funding position. NAPS is looking at ways to protect the scheme from market volatility. In exchange for certain securites and guarantees, BA has been granted a 12 month relief from deficit recovery payments.
Both schemes continue to pay members their full pension entitlement.