11 February 2010
BT and the Trustee of the BT Pension Scheme (BTPS) have announced their agreement on the triennial actuarial funding valuation as at 31 December 2008 and a recovery plan which includes measures to give additional security to members.
The results of the actuarial valuation agreed with BT show that the Scheme's liabilities amounted to £40,387 million as at 31 December 2008, when measure against the Scheme's assets of £31,344 million gives an actuarial deficit of £9,043 million.
The Trustee and BT have agreed a detailed schedule of contributions to make good this deficit over 17 years. As previously announced, under this recovery plan, BT will make deficit repair payments of £525 million for the first three years, of which the first payment was made in December 2009. In 2012, the annual deficit repair payment will amount to £583 million, and will then increase each year by 3% per annum giving a final payment of £856 million in 2025.
Separately the normal joint employer/employee annual contributions will reduce from 19.5% to 13.6% of salary with effect from 1 April 2009, mainly as a result of the benefit changes that were put in place as a result of the Pensions Review Agreement.
The value of the scheme's assets have increased by about 10% from £31 billion at 31 December 2008 to approximately £34 billion at 31 December 2009.
In order to improve the security of members of the Scheme, the Trustee and BT have entered into legally binding agreements on several other matters.
In line with the normal requirements, the results of the valuation and recovery plan will now be submitted by the Trustee to the Pensions Regulator for their review. The Pensions Regulator has been kept fully informed as discussions have developed, but has not yet had the opportunity to review the full detail of the agreement announced today. However, the Pensions Regulator's initial view is that they have substantial concerns with certain features of the agreement. BT and the Trustee will continue to work with the Pensions Regulator to help them complete their detailed review.
The CWU welcomes the agreement between BT and the Trustee which clearly demonstrates BT's continued commitment to the BTPS. The outcome of the valuation also emphasises the significance of our Agreement with BT over benefit changes.