Nov 14, 2017

BT plans to close defined benefit pension to 11,000 managers

BT plans to close its defined benefit pension scheme to 11,000 of its managers and offer substantially lower matching contributions to 21,000 front-line staff, as the telecoms group lays out its most concrete attempt to get to grips with a crippling £14bn pension deficit. A document seen by the Financial Times was sent on Tuesday to members of the group's pension scheme, unions and pension trustees, kicking off a 60-day consultation period. BT has also proposed underwriting the pension scheme by offering pension trustees the rights to some of its assets if the company were to become insolvent. John Ralfe, an independent pensions consultant, said that ending the defined benefit scheme "Won't be painless" and added that the switch to CPI could prove troublesome if it is not approved quickly. "However, much BT tries to reinvent itself as a 21st-century company, it still has the very 20th-century problem of huge pension liabilities - its £57bn of pension liabilities are more than twice its £25bn market cap," he said.

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