BT plans wholesale reforms of pension scheme

BT plans wholesale reforms
of its £35bn pension scheme following its profit warning in an effort to cut
costs by raising the retirement age from 60 to 65, increasing staff
contributions and basing payouts on a career average instead of final salary.

The telecom giant is in negotiations with the Communication Workers Union and
Connect, which represents BT managers and proposals of the changes will be sent
to members in the next few weeks at the start of a formal consultation, The
Times reports.

Hanif Lalani, BT finance director is replacing François Barrault as head of
the division, but Lalani stays responsibile for BT’s pension fund during the

Actuaries will make a three-yearly valuation of BT’s scheme next month. But
the stock-market slump will expose a giant funding gap, analysts like Bernstein
Research’s Robin Bienenstock believes. He estimates a £5bn deficit and thinks
trustees will demand top-up payments of £500m a year.

Further reading:

BT Global Services chief quits after profit warning

BT warns of disappointment in Global Services arm

The Times story

Related reading