21 December 2006
BT has said its pension fund deficit has grown to £3.4bn,
and the company will increase its contribution from next year in a
bid to boost the scheme.
Most of the £3.4bn deficit stems from BT's defined benefit
scheme, which was closed to new members in April 2001 and replaced
by a defined contribution scheme.
Under an agreement reached with the pension scheme trustees, BT
will make a one-off payment of £840m to the fund by April
2007, representing three years' instalments of a special payment.
The firm will then make another seven payments of £280m a
year between 2009 and 2015. This agreement replaces a previous
pledge to contribute £232m annually for 15 years.
BT also increased its forecast for the annual return of the
scheme to 3.2 per cent, up from an earlier prediction of 2.5 per
cent. However, BT has agreed to pay in more if returns do not reach
3.2 per cent a year and may contribute less should returns exceed
the forecast.
Under the agreement, employee contributions will stay at 6% of
salary, whilst BT will contribute 13.5% of salary from 1 January
2007, up from 12.2%.
