BAE to contribute £661 million to pensions

BAE Systems said yesterday it would contribute £661 million this year under revised funding plans to tackle its huge pension deficit.

BAE, Europe's largest defence firm, said it would make one-off contributions of £1.087 billion over 10 years which included cash and the transfer of assets such as property.

BAE said it would contribute £661 million in 2006, including a cash contribution of £181 million under the revised plan.

The company agreed a deal with its staff in February to tackle a £3.1 billion deficit on its UK pension schemes.

"We have worked in close consultation with our Employees, Trades Unions and Scheme Trustees to develop pension arrangements acceptable and affordable to both the company and its people," chief executive officer Mike Turner said in a statement.

BAE said in February it would make a one-off £350 million contribution to its pension programme in the current year, which included cash and property.

BAE shares were down three per cent at 344-1/2 pence at 1052 GMT (11:52 a.m. British Time).

The company last week exercised a put option to speed up the sale of its 20 per cent stake in Airbus to the plane maker's majority owner, EADS.

Analysts said BAE could generate as much as £4.5 billion for fresh acquisitions from the sale.