BT considers offering pension scheme members infrastructure stakes

BT has begun negotiations to allow its pension scheme members to purchase stakes in its communications network to increase the security of their retirement savings, according a report from the Sunday Telegraph.

The potential arrangement could see the scheme’s 290,000 active, deferred and pensioner members owning portions of the telecoms giant’s £20bn-valued network so that their pensions would remain funded even if BT encountered financial difficulties, in a move that had been discussed with trustees in 2017.

Citing city sources, the report added that talks were at an early stage and were not guaranteed to result in a deal, with the scheme’s triennial valuation having recently begun.

When the strategy was previously mooted three years ago, BT instead opted to borrow £2bn for deficit reduction contributions (DRCs) against a deficit of £11.3bn, while also agreeing annual DRCs of £900m until 2030.

The Sunday Telegraph report speculated that allowing pension scheme members to buy into its infrastructure was a way for BT to secure their retirement income without having to take on more debt, with the company having already cancelled its dividend in the midst of the Covid-19 pandemic.

In May 2020, the telecoms company’s full year results valued the scheme’s deficit at £1.1bn, down from £7.2bn the year before, after liabilities dropped from £59.4bn to £53.3bn and assets remained unchanged.

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