The $42.5 billion BT Group will be closing its defined benefit plans for 10,000 managers, moving them into a defined contribution scheme.
The Monday announcement revealed that following a consultation that ended last month, the telecoms company will end the future accrual of benefits for managers in the BT Pension Scheme (BTPS) on May 31. The following day, contributions for the affected members will go into new individual defined contribution accounts for the BT Retirement Saving Scheme (BTRSS). All previously accrued BTPS benefits are protected.
The company is still working with its Trustee to ensure the changes can take place as scheduled.
BT Group said it is reviewing feedback and will continue to discuss it with the Communication Workers Union (CWU) in regards to the 22,000 employees who remain in the BTPS.
“We are working hard to ensure fair, flexible, and affordable provision for members of our pension schemes,” BT representative Alison Wilcox said in a statement. “I am pleased that we’ve been able to reach an agreement with [trade union] Prospect that achieves this, and we look forward to continuing our dialogue with the CWU.”
The company also announced an agreement with Prospect to increase contribution rates to a 10% maximum for 12,500 managers currently part of the BTRSS scheme. These changes will be implemented on June 1 as well. BT also made changes to its death in service benefits and will formalize medical retirement benefits, but did not provide additional detail.
The BTPS was closed to new members in 2001 and was officially replaced by the BTRSS in 2009, when it became the company’s primary pension plan for new members.