The BT Pension Scheme (BTPS) has been forced to correct its latest deficit figures after its independent actuaries had underestimated the figure by £0.5bn in March.
BT said today (27 July) Willis Towers Watson had got the accounting deficit of its defined benefit (DB) pension scheme, which is reported on a quarterly basis, wrong but that the error has now been corrected.
The correction, which amounts to less than 1 per cent of the total pension liabilities of just more than £57bn, has no effect on the 2017 triennial funding valuation of BTPS, associated cash contributions or pension scheme members, it added.
BT said it has been assured by the actuary that its correction was accurate, and there were no other errors as at 31 March.
The telecom company also revealed it is undertaking further reviews around the calculation.
According to the valuation published in May, the scheme shortfall reached £11.3bn at 30 June 2017.
At that time, the company announced a deficit contribution plan of £13.1bn over the next decade to plug the deficit.
BTPS' accounting deficit net of tax was estimated at £3.9bn at the end of June, which compares with £5.3bn at the end of March.
This £1.8bn reduction in the gross deficit mainly reflects the deficit contributions of £2bn – the first tranche of the plan - but also a reduction in the liabilities, partially offset by the actuaries' mistake.
According to Laith Khalaf, senior analyst at Hargreaves Lansdown, BT’s pension scheme "is taking up significant cash, with £2bn gobbled up in this quarter and a further £1.25bn to come in the next year, to go towards plugging the pension black hole."
He said: "On that front BT says its independent actuaries miscalculated the pension scheme liabilities in March, under-stating the accounting deficit by £0.5 billion.
"The accounting deficit tells us more about bond yields than it does pension obligations, and has no effect on cash flows, but clearly this slip doesn’t exactly help to inspire confidence."
maria.espadinha@ft.com
