Members of the BT Pension Scheme (BTPS) will have their defined benefit (DB) pensions protected following the separation of the Openreach business.
The deal comes after months of negotiations between BT, Openreach and Ofcom to deal with competitor concerns that BT was too dominant in the market.
BT had previously argued 300,000 members' pensions would be at risk, pitting the pension as a major obstacle to any deal.
However, around 32,000 employees will now be transferred into a distinct entity, although Openreach will remain part of the BT Group. The transfer will not take place until the agreement is implemented and pension arrangements have been made.
Employee terms and contracts will stay the same after the transfer, and members are expected to remain part of the BTPS with Openreach becoming a participating employer.
The final salary BTPS currently has a Crown Guarantee - put into place when BT was privatised in 1984 - which ensures pensions continue to be funded by the government in the event of BT winding up.
It is anticipated this guarantee will be maintained for Openreach employees, although this will require a change in legislation. This guarantee may be pivotal to the deal being accepted.
The BTPS trustee board welcomed the deal but said some pension matters still needed to be resolved.
"We are pleased that BT and Ofcom have reached agreement on a long-term regulatory settlement in relation to the Digital Communications Review," a spokesperson said.
"Going forward, the trustee will continue its active engagement with the government, BT and other stakeholders to seek to conclude the remaining pension matters in the interests of our members so that these arrangements can proceed."
Communication Workers Union (CWU) deputy general secretary for telecoms and financial services Andy Kerr said pension benefits were a top priority.
"We are pleased that the uncertainty for our members in BT and particularly those in Openreach has now come to an end," he said. "However, nothing will happen straight away for our members, and there are a number of pre-conditions that need to be agreed before our members transfer; this might take some time.
"For the CWU it's vitally important that our members in the BTPS are fully protected and their pension benefits are not affected."
The scheme, which has three sections, fully closed to new members in 2001 but remains open to accrual. As of 31 December, it had a deficit of £9.2bn net of tax on the IAS 19 accounting measure. At the time, it had £59.3bn of liabilities and £48.9bn of assets.
The Pensions Regulator said it would continue to be involved in the negotiations.
"We note the announcement today to separate Openreach from BT," a spokesperson said. "We have been working with Ofcom, BT and the scheme trustees to understand what impact Ofcom's proposals will have on the BT pension scheme.
"As the separation progresses, we will continue to engage with the pension trustees and other parties to ensure that any issues for the pensions scheme are addressed."
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