BT will launch a consultation with members over the future of its defined benefit (DB) scheme "shortly", potentially including plans to close the plan to future accrual.
Ending accrual in the BT Pension Scheme (BTPS), which has 32,100 active members, was initially reported as a possibility in May when the company approached trade unions with the idea.
It is seen to be in response to an expected doubling of the BTPS' actuarial deficit in its ongoing triennial valuation. This is predicted to show a £14bn deficit, compared to £7bn as of 30 June 2014, as PP reported in May.
The scheme is partially underwritten by the government, with benefits accrued before the company was privatised in 2012 underpinned by a Crown Guarantee.
In an announcement on the London Stock Exchange, the company said it was aiming to deliver "fair, flexible and affordable pensions" and so it would kick off a 60-day consultation in the near future.
Affected employees would be moved into the company's defined contribution (DC) scheme, it is expected.
The announcement said: "We continue to review the future pension benefits under our main DB and DC schemes in the UK, with the objective of providing fair, flexible and affordable pensions. Discussions with our unions are continuing and we expect to undertake a 60-day consultation with our affected employees shortly."
The telecommunications giant also recorded a drop in the scheme's accounting deficit over the third quarter of the year. At the end of September, the plan had a shortfall of £7.7bn on the IAS 19 accounting measure, falling slightly from £8bn at the end of June.
The company said an increase in the discount rate had resulted in the reduction in liabilities, but this had also been partly offset by a fall in asset values.
The scheme is expected to complete its 30 June 2017 valuation in the first half of 2018.
BT is also hoping to cut its future liability growth by switching the ‘C' section of its scheme from the Retail Prices Index to the generally lower Consumer Prices Index. The High Court will hear arguments in December.
Nearly every trustee is confident of the next stage in their scheme’s strategy, despite almost an equal number being forced to consider replacing plans within the prior 12 months, according to research by Barnett Waddingham.
Companies could be overstating their pension liabilities by up to £60bn due to their life expectancy assumptions, according to XPS Pensions Group.
Defined benefit (DB) schemes that provide GMPs must revisit and, where necessary, top-up historic cash equivalent transfer values (CETVs) that have been calculated on an unequal basis, a landmark court judgment said last week.
Regulators must act now to impose some "proper regulation" to stop another defined benefit (DB) transfer advice disaster, saysTim Sargisson.
Opportunities for defined benefit (DB) schemes to pursue investment approaches that help repair the UK’s economy cannot stand in the way of improving member outcomes, Aegon says.