BT considers scrapping 'gold-plated' pensions in bid to plug £14bn deficit

Former state monopoly BT is considering shutting its "gold-plated" defined-benefit pension scheme in an attempt to close its looming deficit.

BT's pension scheme deficit in 2016 is thought to be in the region £14bn, up from £10bn in 2015. Next month the telecoms giant will enter negotiations with pension trustees about the future funding of the scheme.

A BT spokesman confirmed that the company was starting a review of the BT Pension Scheme (BTPS) benefits. "Despite the changes we made to the BTPS in 2009 and the £6bn BT has since paid in top-up payments, the cost of future benefits continue to rise.

"No decisions have yet been made and our union partners and the BTPS Trustee will be involved in discussions about the review. If any changes are proposed, we will consult with our employees before making any final decisions."

Under a defined benefit scheme, BT would pay an annual income based on a calculation of years of service and either a career average or final salary.

Andy Kerr, deputy general secretary of the Communications Workers Union, said the body was in "absolute opposition" to the closure of the scheme for existing members and has "made it clear that we will use all means up to and including industrial action to keep the scheme open for current members".

He added: "There is unlikely to be any developments in the next couple of months as the union will now be commencing negotiations with BT over its plans for the future."

Earlier this month, BT said it will axe 4,000 jobs worldwide, with the lion's share thought to come from its Global Services outsourcing division.

The shake-up follows an accounting scandal in Italy, which led to a £530m writedown, hurting the company's bottom line. The incident has also wiped £8bn off BT's share price.

Profits plummeted 19 per cent to £2.4bn during a "challenging" 2016/17 financial year. ®