BT slashes billions from pension fund
BT is knocking almost £3billion from its pensions bill by cutting the nest eggs of around 250,000 of its former employees.
The landmark decision will in turn reduce the rates at which pension pots increase every year, leaving ex-staff short of £11,000 during retirement. However, rather worryingly for those that have similar schemes setup elsewhere, many experts have predicted that other companies will follow suit.
Tom McPhail, a pensions guru representing Hargreaves Lansdown, told the media that the snowball effect would come into play and that the telecoms giant had paved the way for firms to slash pension deficits without provoking mass strikes and rioting in the streets due to the fact that many people will not feel the impact of the changes until much later and would not be able to accurately calculate exactly how much they will loose while getting poorer with age.
BT’s move mirrors the exact same actions that the ConDem Government took when it decided to link annual pension increases of workers from the public sector employees to the lowest measured cost of living index. Over the years, the Consumer Price Index has been around 0.75% less than the current Retail Price Index because it excludes mortgages as well as other housing costs.
While as McPhail says there probably won’t be any affirmative action taken from those affected, that isn’t to suggest that most won’t be up in arms about the announcement and will make their voices heard through methods other than protesting as well as complaining to watchdog groups and the like.