Yahoo Finance BT closes in on deal to shut final salary pension
BT is closing in on a deal with union leaders to shut its final salary pension and transfer workers to a defined contribution scheme, as it attempts to tackle its ballooning funding deficit.
Officials at the Communications Workers Union (CWU), which represents rank and file BT workers, were today in discussions with local branches over a proposed settlement that would provide more protection for members but still allows the company to stop its defined benefit scheme accruing new and harder-to-predict liabilities.
The talks were described as “tense” and there is no certainty of an agreement. The CWU has previously said the BT final salary scheme must not close.
However, sources said a deal between BT and the CWU was possible by the end of next week. BT managers have already agreed to move to a defined contribution scheme, leaving 21,000 active members in the final salary pension.
The scheme is Britain's largest private pension, with more than 300,000 members including retirees and ex-employees. It also has one the country's biggest funding shortfalls of around £14bn.
The official deficit is currently being reassessed on behalf of trustees. BT aims to curb potential demands for higher to-up payments, currently up to £500m per year, by stopping members accruing more benefits.
The company does not require the CWU's agreement to close the scheme but risks a damaging industrial dispute if a deal on a more generous defined contribution pension is not agreed.
A BT spokesman said: “We’re continuing to have productive discussions with the CWU, following our employee consultation.
“We’ve taken on board a number of their suggestions and are hopeful that an agreement can be reached that’s beneficial for our employees, while bringing greater certainty on future payments.”
The CWU declined to comment.
