BT ‘to shut’ pension scheme with £14bn black hole
THOUSANDS of BT staff face having their retirement nest eggs cut as chief executive Gavin Patterson moves to rein in the firm’s pension scheme deficit.
The 50-year-old is looking at options to reduce costs, including closing its final salary scheme and moving members to defined contribution schemes. Formal proposals are expected within weeks.
BT yesterday said it could also give the pension scheme a ‘prior claim’ over its assets, including buildings such as BT Tower or its BT Centre headquarters in the City.
At the last review the pension scheme deficit was nearly £10bn, but analysts now believe it could be closer to £14bn.
Patterson insisted he had not yet ‘made a decision to close anything’, but added: ‘In the next few weeks we will be consulting members on a range of different proposals around benefits, both the defined benefit and the defined contribution schemes. We need to balance a number of things – affordability, fairness, making sure that there is not one group of employees that [is] being treated unfairly.’
The shake-up could put him on a collision course with union chiefs.
Last night, the Communication Workers Union warned against closure of the final salary scheme.
It is in the middle of a bitter dispute with Royal Mail over similar changes. A union spokesman said: ‘We remain resolute in our opposition to closure of the BT pension scheme, and have made it clear to BT on repeated occasions that closure will result in an industrial dispute.’
It is one of the issues Patterson is grappling with towards the end of a torrid year for the company.
The company yesterday unveiled half-year results showing revenues fell 1pc, to £ 5.95bn, in the three months to September 30, when compared to last year. Profits fell 1pc to £666m in the same period. It added only 7,000 customers to its TV services – compared to 63,000 last year – after customers were told they would no longer be free with phone and internet services.
It has spent billions on rights to broadcast Champions League and Premier League football matches and is again due to go up against Sky, in the next quarter, at auction.
Meanwhile, problems at its Global Services division were cushioned by a strong performance from its mobile division – mainly EE – which added 279,000 customers.
It comes after a £530m accounting scandal in BT’s Italian arm, a slowdown in public sector business and several bitter rows with watchdog Ofcom, have weighed on its share price.
Patterson and Clive Selley, chief executive of BT’s network arm, Openreach, are also under mounting political pressure to invest more in Britain’s broadband network. Shares fell 2.7pc, or 6.9p, to 253.6p – the lowest since February 2013.
Amid speculation about Patterson’s position, Jan du Plessis took over as chairman on Wednesday but backed him in meetings with shareholders. BT has shed 1,500 staff this year, with another 2,500 to go.