As part of an agreement that is likely to become the template for all struggling final salary pension plans, according to The Times newspaper, the telecom group looks set to increase the retirement age from 60 to 65. It also aims to change the final salary factor to a career average rather than earnings at retirement, according to the news report.
BT, which operates one of the largest pension funds in the U.K. private sector, with liabilities of £35 billion, said its proposals include increased contributions for members. The retirement fund has about 65,000 active members, 97,000 deferred members, and 178,000 pensioners.
The scheme, which is managed by Hermes, the wholly owned fund manager, has been buffeted by tumbling investment markets and is struggling to meet its long-term commitments, the news report said. BT reported a surplus of £600 million under the IAS accounting standard, although this has fallen from £2 billion at the end of March.
According to the newspaper, Ian Livingston, the chief executive, insisted that the group will preserve accrued pension rights for scheme members and staff hoping to retire over the next year or two. He admitted, however, that younger employees, such as those in their early fifties, “might have to work an additional year or so” to accrue the same pension rights.