UK - British Telecom has dispelled analysts' fears that it will haveto raise employer contribution rates to reduce its rising pension scheme deficit, following the release of its first quarter results.
Investment bank JPMorgan issued a report last month which estimated that the telecommunication giant’s FRS17 deficit had soared from £1.8bn at the end of March 2002 to £4.2bn by June 30, 2002, owing to its high UK equity allocation.
This sparked fears that employer contribution rates would have to go up considerably after the scheme’s actuarial review in December.But BT’s first quarter report reveals that the scheme’s actuary has concluded that the deficit has not “materially changed” from the end of March figure.
It said: “The funding deficit was estimated at £1.6bn as at December 31, 2001, and the company’s external actuary has indicated that he does not believe that this deficit has materially changed as at June 30, 2002.”
The report added that as a result, its annual deficiency payment of £200m will not increase following the next funding valuation as at December 31, 2002.
Watson Wyatt acts as actuarial advisors to the BT pension scheme.
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