Pensions black hole deepens

May 22 2003 by Brian Amble Print This Article

Britain's pension crisis has deepened with three companies revealing massive black holes in their pension funds.

Telecoms giant BT has revealed a deficit of £6.3 billion in their pension fund, while the Royal Mail unveiled a £4.6 billion hole.

Energy giant National Grid Transco has also admitted that its pension fund hole is approaching £2bilion. Even the Bank of England has a £293 million gap in its staff pension fund after taking a prolongued pensions contribution holiday.

Experts reckon British industry as a whole may face a pensions shortfall of up to £300 billion.

BT's pension scheme is one of the largest in the UK and has been hit badly over the last three years by poorly performing global share prices. But despite making cash injections of £200m each year since 2000 to shore up the fund, BT said that the deficit had risen from £1 billion to £2.1 billion in the last three years.

The figure represents the equivalent of £5,737 for each of the scheme's 366,000 members. The company will have to pay an extra £120 million into the fund in this financial year.

But BT Finance Director Ian Livingstone told BBC Radio that there was no reason for the firm's pensioners or staff to be worried about the security of their pensions.

"It's a big and very long term scheme," he said. "If you look at the long term trends, the trustees and ourselves are very comfortable about the numbers that have come up," he added.

Meanwhile, Royal Mail chairman Allan Leighton has written to the 440,000 workers and pensioner members in its pension schemes telling them not to worry over the deficit.

The company would pump £100 million a year into their pension schemes, he said, which should clear the deficit over five to ten years if stock market conditions improved.

However the Royal Mail lost £611 million last year, while BT's profits jumped 41 per cent to £1.8 billion.

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