The defence contractor and the T&G are meeting this week to discuss plans to bridge a £2billion shortfall in its pension fund.

The speculation comes after the company announced profits were down £616million on last year and more than 1,000 jobs across the UK were axed.

Farnborough-based spokesman Richard Coltart said the company was involved in ongoing consultation with employees and the union.

In its UK Pensions Review, workers were told the company was awaiting feedback on the final proposals.

“Although no-one likes paying more for anything, the company believes from the feedback we have received, that retaining final salary provision is important to its employees,” said Mr Coltart.

If the plans get the go-ahead, workers will have to pay a total annual increase of 3.7%.

BAE Systems has had a troubled year, but chairman Sir Richard Evans is optimistic the company will ride the storm.