BA and BT could cut dividends to reduce deficits
UK - British Airways and BT could cut dividends in a bid to reduce pension deficits, in line with advice produced by the Pensions Regulator.
The analysts cited advice published by the Pensions Regulator last month - which said recovery plan should not suffer in order to enable companies to continue paying dividends to shareholders.
A spokesperson for BT said the company had "taken on board" the Regulator's advice, but could neither confirm nor deny any decisions taken over dividends ahead of the publication of the company's annual report in May.
He said: "More details will come following the triennial review of the pension fund in May, and the dividend policy will be announced around the same time."
British Airways, which as of March 2008 had a pension scheme deficit of £1.5bn, also confirmed it was considering its dividend policy, which is similarly due to be announced ahead of full-year operating results in May.
A BA spokesperson said the company expected to incur a £150m loss over the course of the year, but could not confirm whether the Regulator's guidance would be taken into account when deciding upon a dividend policy.
He said: "The dividend policy is set by the board in May, ahead of the fourth quarter report, but we have already told the City we anticipate a £150m loss this year. Only the board can make a decision regarding the Regulator's advice."
In a statement to Global Pensions, the regulator commented: "We do not have any direct powers to stop companies paying dividends; one of our statutory objectives is to protect members' benefits and we will work with employers and trustees to ensure that an appropriate funding plan is put in place.
"We have a flexible and robust system which enables schemes to create funding plans that suit their specific circumstances."
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