BT agrees pensions deficit deal

TELECOMS giant BT has secured the backing of pensions trustees for its plans to tackle a �9billion funding deficit.

TELECOMS giant BT has secured the backing of pensions trustees for its plans to tackle a �9billion funding deficit.

The group, whose 340,000-member scheme is the biggest in the UK, has reached agreement with the trustees for a programme of payments designed to clear the shortfall over the next 17 years.

However, BT added that the Pensions Regulator had “substantial concerns” over some aspects of the agreement and was still reviewing the plan.

Under the proposals now backed by the trustees, BT will pay �525million into the scheme for the next three years, rising to �583m in year four and increasing at a rate of 3% a year thereafter.

The agreement comes with little for than a month before a deadline of March 31. Rod Kent, chairman of the trustees, said there had been “exhaustive” efforts over the last 18 months to reach a solution at a time of unprecedented financial turbulence.

He added that the agreement “secures significant additional support to the benefit of scheme members, underpinned by a strong sponsor”.

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Besides ranking at the UK's largest pension fund, the BT scheme has also had the unwanted record of having the country's largest private sector pensions deficit. Its funding shortfall was second only to that of the Royal Mail, in the public sector, which last year revealed a �10bn deficit.

News of the trustees' agreement came alongside the publication of third quarter trading figures from BT which showed a 39% improvement in underlying pre-tax profits to �466m.

BT chief executive Ian Livingston said that improvements to the business were providing enough cash to support the pension scheme, while also allowing the group to continue shareholder dividend payouts, to invest in the business and to reduce debt.

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