BAE Systems, the country's biggest aerospace and weapons company, has finalised a plan to eliminate its huge pension fund deficit.
BAE says the new plan is affordable
It will pay in an extra £1.1bn over the next ten years in cash and assets to help eliminate the deficit, which stood at £3.1bn at the end of 2005.
Both the company and its staff are also paying higher regular contributions.
Although the scheme will provide reduced benefits in the future it will be kept open for current members.
The plan was first outlined in February this year and has now been agreed with the scheme's trustees and the trade unions.
The chief executive of BAE Systems, Mike Turner, said the new plan was acceptable and affordable.
"Pension scheme funding has been a challenge for the company but I am delighted that we have now completed these revised arrangements through the constructive approach of all concerned," he said.
BAE Systems, formed from the merger of British Aerospace and the weapons businesses of GEC, is the country's largest manufacturing company and its largest industrial exporter with more than 90,000 staff around the world.
Its main pension scheme, which has already been closed to new members, also has the largest pension fund deficit of any company in the private sector.
To save £770m, other changes have been agreed:
- A formula to reduce the expected pension if longevity improves further, but
- Allowing staff to work beyond 65 to offset that reduction
- Calculating the pension on the average pay in the final three years at work, not just the final year
- Reducing ill-health and early retirement pensions.
Since 2003 staff have already seen their contributions rise from 5% to 9.29% a year, while the company's contributions have risen from 11.7% to 18.21%.
The deal was welcomed by John Wall, general secretary of the Confederation of Shipbuilding and Engineering Unions.
"The company were clearly committed to working closely with both the unions and their employees to find a way forward acceptable to everyone," Mr Wall said.