UK roundup: BT Pension Scheme, Pitmans Trustees
UK - BT, the UK telecoms provider, has brought forward its annual pension deficit payment by nine months in an effort to gain the maximum tax savings from the £500m (€570m) contribution.
Under the current deficit reduction plan, agreed with both scheme trustees and the Pensions Regulator, BT was to pay £525m for the first three years, between 2009 and now.
The £505m paid this month by the company is its third annual payment, reduced by £20m as BT said this was the correct actuarial value of the money due in December. Bringing the payment forward from the end of the year allows it to fall within the current tax year.
BT said in a statement: "The payment will be tax deductible at a corporation tax rate of 28%, rather than the 26% which will apply in the 2011-12 financial year, and the timing of the tax deduction will be brought forward to the first half of the 2011-12 financial year."
The BT Pension Scheme, which saw its deficit more than halved due to the switch from the retail price index (RPI) to the consumer price index (CPI), is one of the UK's largest pension schemes with assets of £35bn (€40.6bn).
Last year, trustees of BT Pension Scheme launched a court case, seeking clarification of the crown guarantee - under which the government should cover pension obligations should the former state-owned entity become insolvent. In October, the court ruled that the government was indeed liable in the unlikely case of the telecoms company collapsing.
Earlier this month, former trustee director Paul Spencer took over as scheme chairman from Rod Kent.
Meanwhile, Pitmans Trustees has argued that many independent trustees are not able to adequately perform their duty to members.
The firm criticised that there was no objective measure used to judge the quality of trustees and that many independents were appearing in a field that was not regulated.
The firm's managing director Richard Butcher pointed to trustees' duty to secure member benefits at the least cost to sponsors and argued that the best person for such a role was one with previous industry experience.
"A really good independent trustee will normally be a pension person, with a recognised relevant professional qualification, who is involved with a large number of pension schemes," Butcher said, adding that this was needed so that sustainability could be assessed by trustees.
Butcher said further that they needed the "ability to develop and execute" the strategic direction for the scheme, while he said many understood this as simply reducing risk, which was not sufficient.
He added: "Employers and lay trustees need to be aware of the different types of independent trustee, when they consider appointing one. If they are not they are in danger of appointing some one who will not help them to reduce and could even cause them to increase their long term exposure to this significant risk."