UK - The BT Pension Scheme is expected to reveal the largest ever pension fund deficit in UK corporate history next week.
Financial analysts predict BT – which has the largest private sector pension in the UK with assets of £26.6bn – will announce a pensions black hole of around £7bn in its annual report, to be released on May 22.
BT’s scheme actuary, Watson Wyatt, has been criticised by its peers for using traditional valuation methods – the SSAP24 accounting standard – when calculating a pension deficit.
In March Watson Wyatt placed the BT Pension Scheme’s deficit at just £1.5bn under SSAP24, despite investment banks estimating an FRS17 deficit of between £5.5bn and £8.8bn.
One analyst stressed that the £7bn figure was an estimate, subject to a number of actuarial assumptions for equity growth.
He explained: “Watson Wyatt may have changed its investments or assumptions – the final number is very sensitive to those sorts of things.”
A Watson Wyatt spokesman commented: “Pension investment policy and funding policy depend fundamentally on the pension security policy – which is ultimately a political issue of balancing the interests of people’s pensions against shareholder and business interests.”
The Communication Workers’ Union deputy general secretary Jeannie Drake added: “BT has assured the unions that it will fulfil its commitments to the pension fund, and there has been nothing in the company’s conduct that would lead us to believe this was not still the case.”
*BT has denied reports that it is planning to put an additional £1.5bn into the pension scheme over the next 15 years.
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