BT scores victory as pension battle hots up

 
Oliver Gill
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BT has one of the UK's largest pension deficits (Source: BT)

Telecoms giant BT today secured the backing of more than 10,000 employees in its bid to grasp control of one of Britain's biggest pension deficits.

The Prospect union, which represents around 11,000 predominantly white-collar workers, voted in favour of a series of changes proposed by BT last year.

The ballot result will be a shot in the arm for BT, though it faces a much bigger battle with the larger Communication Workers Union (CWU), which represents more than 21,000 workers.

BT has proposed a two-tier approach: shutting its final salary scheme to managerial staff while keeping it open for blue collar workers. Managers will be transferred to a defined contribution scheme, an option that will be available to all staff.

The non-managerial staff wanting to remain in the defined benefit – or final salary – scheme will see employer contributions fall under the proposals, a move that BT hopes will persuade workers to join their managerial colleagues in the defined contribution scheme.

A defined benefit scheme locks in a specific retirement income, whereas a defined contribution fund pays a variable income stream based on the performance of investments.

Some 60 per cent of Prospect members balloted in favour of the changes.

Read more: BT pension black hole could reduce – not rise – by billions

BT is putting the final touches on its three-yearly pension scheme valuation. The FTSE 100 firm's mammoth retirement scheme has historically been a millstone around its neck, with some experts suggesting a shortfall of £14bn.

The CWU, which spent much of the second half of 2017 battling with Royal Mail over its planned pension closure, is likely to be a tougher nut to crack. The union leveraged social media to successfully whip up support in its battle against Royal Mail. It has already started a similar campaign on Facebook entitled "#TellBTNo".

A consultation on the BT changes is due to conclude on 17 January.

A BT spokesperson said: "We’re pleased that employees represented by Prospect have voted to accept the changes we’re proposing to our two largest pension schemes.

"We understand the importance of our proposals for our employees and have spent considerable time developing them and working with Prospect, to ensure they are fair, flexible and affordable for all.

"Our employee consultation is due to end on 17 January, after which we’ll consider all their feedback before announcing our plans."

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