BT may close its defined benefit (DB) scheme to future accrual in a bid to stem its ballooning deficit, according to reports.
The suggestion is likely to come up in the BT Pension Scheme's (BTPS) triennial valuation, which kicks off on 30 June and will conclude in the first half of 2018.
The BTPS, which is the private sector's largest DB fund, has around 300,000 members and a deficit of £8.6bn on the IAS 19 accounting measure as of 31 March. It is partially underwritten by the government, with a Crown Guarantee in place to protect benefits accrued before the company was privatised.
Last week, the company, in its annual accounts, mooted a contingent asset deal for the scheme's trustees.
The same report warned the scheme's deficit, particularly if the triennial valuation shows an estimated £14bn deficit, would affect the company's wider financial standing. At the previous valuation, dated 30 June 2014, the scheme had a £7bn deficit.
The report said: "If there's an increase in the pension deficit at the next valuation date, we may have to increase deficit payments into the scheme. Higher deficit payments could mean less money available to invest, pay out as dividends or repay debt as it matures, which could in turn affect our share price and credit rating."
BT declined to comment on the reports, but a spokesperson said: "We are starting discussions with the Trustee of the BT Pension Scheme about the triennial valuation. We don't expect this process to be completed until the first half of 2018 at the very earliest."
BT would follow a number of other firms, including Marks & Spencer and ITV, which have announced plans to close their schemes to future accrual over the last year. Royal Mail is negotiating a deal with unions for its future pension provision when its scheme closes next April.
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