Anger as BT shifts pension benchmark

BT could cut its pension scheme liabilities by up to £3bn after it decided to follow the government's lead and use the Consumer Prices Index (CPI) rather than the Retail Prices Index (RPI) as the base index.CPI has traditionally run at a lower rate than RPI because it does not include mortgage and other housing costs.At 30 September 2010 BT's pensions deficit was £5.2bn (£3.8bn, net of tax) compared with £7.9bn (£5.7bn, net of tax) at 30 June 2010. The impact of this decision is to reduce the BT's pension liabilities by around £2.9bn, it said. Analysts said that the deal with the trustee was worth as much as 27p a share.The telecoms giant has an agreement with the regulator to wipe out its deficit by making annual payments of just over £500m over the next 17 years. Today's agreement will not affect the next two payments of £525m in 2010 and 2011.BT workers reacted angrily to the change. The Communication Workers Union said that the changes could mean smaller pension payments for retired BT engineers and potentially hit 331,000 people in the scheme."This is an attack on the rights of responsible and hard working BT staff both past and present. CPI linking will mean smaller pension increases for many hard pressed pensioners and will lead to the pension falling below the real cost of living, " said Andy Kerr, deputy general of the CWU.