FRANKFURT, Sept 2 Lufthansa wants to
cut pension costs by dropping its current retirement plan in
favour of a new scheme where payments to staff are linked to
Peter Gerber, board member of the airline's passenger
division, said on Monday Lufthansa planned to scrap the current
pension system by the end of the year but said any new system
would have to be approved by unions.
Lufthansa, Europe's biggest airline by sales, is following a
growing trend in Europe to reduce pension costs by replacing
so-called defined benefit pensions with defined contribution
schemes more closely tied to investment returns.
The airline, which is also in the middle of a cost-cutting
drive to try to boost profits, wants to switch to a
defined-contribution pension, where employees and employer pay
into the scheme but the final pension depends on actual market
Lufthansa's current plan, which covers its 60,000 staff in
Germany, guarantees a minimum interest rate of 6 percent to 7
percent on contributions.
Gerber told journalists on a conference call that with
current low interest rates and rising life expectancy, the
airline's costs have risen in the past few years.
Last year, for example, Lufthansa's staff costs rose due
partly to a 259 million euro ($341.52 million) payment it made
to plug a pensions gap for German-based staff.
Gerber said if current interest rates were to continue next
year, it would cost the airline roughly 470 million euros to
plug the gap.
He said under the current system, retired cabin crew get an
average amount of nearly 1,000 euros a month, while a pilot
would get a bit more than 4,000 euros.
Cabin crew trade union UFO and pilots union Cockpit said
they were against Lufthansa's plan, saying it would mean lower
pension benefits. They said they would ask experts to examine
($1 = 0.7584 euros)
(Reporting by Marilyn Gerlach; Additional Reporting by Peter
Maushagen. Editing by Jane Merriman)