Employment News

BT Pension Scheme Triennial Actuarial Valuation

18 December 2006

The trustees of the BT Pension Scheme (BTPS) and BT have announced that they have reached agreement on the funding of the BTPS following the Triennial Actuarial Valuation of the scheme.

As at the 31 December 2005 the deficit in the BTPS has been assessed by the trustees' actuary as £3.4 billions. The agreed funding arrangements should remove the deficit over a ten year period to December 2015.

Key features of the funding agreement are:

• An advanced payment of £840m, representing three years’ instalments of £280m, into the scheme by 30th April 2007 - £500m of which is to be paid in December 2006.
• Payments of £280m pa in 2009-2015 inclusive.
• A "true-up/true down" agreement has been reached to adjust post 2008 Company contributions depending on investment performance. This for example gives the Trustees insurance should investment performance not be in line with expected returns.. Subject to Trustee agreement, it gives the company a benefit where investment returns exceed 3.2% real.
• Employee contributions will remain at 6%. Joint employer/employee contribution will increase from 18.2% to 19.5% from 1 January 2007.

The CWU welcomes this agreement that should secure the future of the scheme whilst enabling the rapid removal of the scheme deficit. The union also welcomes the reassurance from Sir Christopher Bland, BT Chairman, that; "BT stands fully behind its pension obligations. The scheme is well managed and assets have grown very strongly in recent years".

At a time when other companies have sought to increase employee contributions or reduce benefits as part of a deficit recovery programme, contributing members to the BTPS will welcome the fact that the contribution levels for BTPS members will remain at 6% and that benefits are unchanged.