Lufthansa to modify pension plan for employees by year's end
Lufthansa, the German air carrier, through one of its senior executives, said that it is planning to cut its pension costs by scrapping its current pension plan for a new scheme. This new scheme would have payments linked to the investment performance of the company.
According to Peter Gerber, Lufthansa board member for the passenger division of the airline, said the company would be scrapping the retirement plan by year's end. He also said that the new proposed scheme would still have to be approved by the airline's unions.
Lufthansa is the biggest airline in Europe in terms of sales. It is following the trend in European firms to reduce pension costs through a plan called defined benefit pensions, where the contribution schemes would be related to investment returns of the fund. Its current plan, which covers 60,000 employees, provides a guaranteed return of between 6% and 7% for contributions. Last year alone, the staff costs for Lufthansa had increased to EUR259 million or USD341.52 million as the company had to bridge the shortfall of the guaranteed return for the staff pension.
In response, cabin crew trade union UFO as well as the pilot's union Cockpit said they were rejecting the proposed plan from the airline, as they said it would mean lesser pension benefits. They said they would have experts examine the numbers.