To continue reading please register or login to your OHW+ account.
BT has closed its final salary pension scheme to new employees but the company has denied that this is in a bid to cut costs.
The firm’s £25 billion final salary pension is thought to be one of the biggest in the country but from this month all new employees will only be able to join BT’s money purchase pension scheme.
Under final salary pension schemes the pension an individual receives is based on their salary at or near retirement whereas with money purchase schemes the value of the pension is determined by how much is put in and the performance of the stock market.
A spokesman for BT, which is trying to reduce its £30 billion debt, told Personnel Today said the company had made the change because money purchase pension schemes were better suited to today’s fast moving labour market.
She commented, “People are moving around much more, working patterns are changing. Now people expect to have several different jobs during their lifetime and they are looking for a pension that reflects that. The defined contribution approach was more appropriate for them.”
The spokesman said the changes had been made in consultation with unions and claimed the money purchase scheme would cost BT about the same as the final salary scheme.
BT is the second major UK employer to close its final salary scheme to new employees following ICI, which adopted a similar strategy some months ago.
By Ben Willmott. Click here to respond
