THOUSANDS of employees at BAE Systems in Samlesbury face having to work beyond the retirement age to protect their pension benefits.

It is just one of the proposals being considered by bosses to address a £2.4billion black hole in the firm's main final salary pension scheme.

And unions have also been left seething about its refusal to close an executive scheme -- a non-contributing top-up pension for senior executives -- to address the deficit.

But the company said the executive pension, which sees directors get substantial pay-outs upon retirement, is necessary to attract the best talent.

The deficit, caused mainly by increased life expectancy and poor investment returns, comes despite most employees doubling their contributions in 2002 when the scheme was closed to new members.

A pension update circulated to 37,000 BAE workers, including more than 3,500 in Samlesbury, said increased contributions would reduce the deficit to £1.4billion over the next 20 years.

But that will be of little comfort to employees who have read the proposals to eliminate the remaining deficit. For example, a 45-year-old worker with five years' service will have to work an year and six months after 65 to be able to receive a pension at the previously expected level.

Enhanced early retirement packages for people who take voluntary redundancy will be scrapped. And the firm also wants to raise from 60 to 62 the age at which workers can take early retirement and still receive unreduced pensions.

Union Amicus has now entered talks with BAE and has not ruled out the chance of industrial action.

But Samlesbury works convener Neil Sheehan warned the proposals could mean compulsory redundancies.

He said: "It is morally wrong BAE should be determined to maintain the executive top-up pension scheme for over 800 executives, while 37,000 other employees face draconian pension benefit cuts."

A spokesman for BAE said: "We are in ongoing consultation with employees to address the deficit."

Asked if the executive scheme could be closed, they added: "In order to attract the top talent in the competitive aerospace industry, we have to offer competitive terms."