BAE Systems has announced it is to work towards creating a separate section within the BAE Systems Pension Scheme for Airbus.

The British aerospace company, which sold its 20 per cent share of Airbus in 2006, said the decision was made between the two companies and the scheme trustees last December.

In BAE Systems' final results for 2015, it said the allocation of the deficit to the BAE Systems and Airbus sections will be based on each member’s last employer.

“This allocation methodology is considered to represent a better estimate of the deficit allocation than the relative payroll contributions of active members and has been reflected in the allocation of the IAS 19 pension deficit in the main scheme at 31 December 2015,” the report said.

The impact of the change on the amounts allocated at 31 December 2015 is an increase of £187m (£153m post-tax) in BAE Systems’ share of the reported IAS 19 deficit.

Currently, in the event that an employer who participates in the group's pension schemes fails or cannot be compelled to fulfill its obligations as a participating employer, the remaining participating employers are obliged to collectively take on its obligations.

“The group considers the likelihood of this event arising as remote. However, following the creation of an Airbus section of the main scheme, the group's obligation in respect of Airbus is expected to be removed,” the report stated.

With the exception of the allocation of the main scheme deficit to Airbus, the deficit allocation method for other employers of the main scheme and for all other schemes is based on the relative payroll contributions of active members, which is consistent with prior years and is intended to reflect a reasonable approximation of the share of the deficit.

The next valuations of the UK pension schemes are expected to begin in April 2017.

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