BT union re­jects ‘un­ac­cept­able’ pen­sion cut

The Daily Telegraph - Business - - Business - The Daily Tele­graph By Christo­pher Wil­liams

BT FACES a con­fronta­tion with its trade union over plans to re­duce pen­sion con­tri­bu­tions for 21,100 rank and file staff in a bid to ease the bur­den of the mas­sive fund­ing deficit in its re­tire­ment fund.

The Com­mu­ni­ca­tion Work­ers Union (CWU) says it will urge its mem­bers to re­ject the com­pany’s pro­pos­als in a 60day con­sul­ta­tion be­gin­ning to­day.

BT said it could keep its de­fined ben­e­fit scheme open for 21,100 non-man­age­rial staff in­clud­ing en­gi­neers.

How­ever, it will cut its share of con­tri­bu­tions in an at­tempt to en­cour­age them to vol­un­tar­ily switch to a de­fined con­tri­bu­tion scheme. Al­ter­na­tively, BT said it could close the fi­nal salary scheme and force staff into the de­fined con­tri­bu­tion scheme, al­beit with a three-year boost to its em­ployer con­tri­bu­tions. Around 11,000 managers will be given no op­tion but to move over on the same terms.

The CWU, which rep­re­sents BT en­gi­neers, said the plans were “un­ac­cept­able”. Andy Kerr, deputy gen­eral sec­re­tary, said: “We would like to reach an agree­ment with BT but the cur­rent pro­pos­als for both schemes are un­ac­cept­able. We are ab­so­lutely op­posed to the clo­sure of the de­fined ben­e­fit pen­sion and any changes to it need to take ac­count of mem­bers’ re­tire­ment ex­pec­ta­tions. The de­fined con­tri­bu­tion scheme also needs to be sig­nif­i­cantly im­proved. Our mem­bers de­serve bet­ter and BT can af­ford more.”

BT is at­tempt­ing to re­duce its pen­sion bill as it faces pres­sure from the Gov­ern­ment and reg­u­la­tors to in­vest in broad­band up­grades and con­cern from share­hold­ers over the af­ford­abil­ity of its div­i­dend. re­vealed in May that BT was con­sid­er­ing clos­ing its de­fined ben­e­fit pen­sion scheme to new ac­cru­als.

The over­all re­tire­ment fund has more than 300,000 mem­bers and li­a­bil­i­ties of £57bn, mak­ing it Bri­tain’s big­gest pri­vate sec­tor pen­sion. The de­fined ben­e­fit el­e­ment closed to new entrants in 2001 but around 34,000 cur­rent BT staff joined be­fore the cut­off and are still build­ing up their de­fined ben­e­fit re­tire­ment pots.

BT ex­ec­u­tives have been in ne­go­ti­a­tions with union lead­ers over the plans for sev­eral months.

They had hoped to avoid a stand-off with the CWU, which has voted for strike ac­tion over sim­i­lar pro­pos­als at Royal Mail. A se­nior BT source said: “We have got the reg­u­la­tor and the Gov­ern­ment to han­dle at the mo­ment. We can’t af­ford a fight with the staff too.”

The com­pany will now face fur­ther ne­go­ti­a­tions to avoid an in­dus­trial dis­pute. A BT spokesman said: “If we do noth­ing, BT will be fac­ing hun­dreds of mil­lions in ex­tra con­tri­bu­tions to the scheme, on top of our cur­rent costs. This would dam­age our abil­ity to in­vest in the UK’s com­mu­ni­ca­tions net­works, cus­tomer ex­pe­ri­ence and jobs.”

Changes to the BT pen­sion scheme are part of a multi-pronged at­tack on the deficit by Si­mon Lowth, the chief fi­nan­cial of­fi­cer, ahead of a tri­en­nial re­view of its as­sets and li­a­bil­i­ties.

At the last count in 2015 the fund­ing short­fall was £7bn and BT has agreed to make an­nual top-up pay­ments of up to £250m un­til 2030.

Low in­ter­est rates mean the black hole is ex­pected to widen this time to as much as £14bn, pro­vid­ing pen­sion trustees with po­ten­tial grounds to de­mand higher pay­ments.

As well as partly clos­ing the fi­nal salary scheme, Mr Lowth is also seek­ing to shift pen­sion pay­out in­creases from the re­tail prices in­dex to the less gen­er­ous con­sumer prices in­dex. A court hear­ing on the plan is sched­uled for next month.

21,100 The num­ber of rank and file BT work­ers caught up in the pen­sions dis­pute, with the firm keen to cut costs in this area

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