UK – Britain’s largest pension fund, the £29bn (e46.5bn) British Telecommunications’ BT Pension Scheme, has become the latest UK defined benefit (DB) scheme to close its doors to new members.

“This is something that we’ve been considering for some years. It’s not a surprise move,” says Robert Dunnett, spokesperson at BT.

The firms new scheme, the BT Retirement Plan, open to joining workers is run on a defined contribution (DC) basis, although BT says the switch is not a way of saving on contributions.
“Although the change itself won’t save BT any money, it will cost roughly the same, the DC scheme does, by definition, give you predictability on how much you have to pay into it, whereas with a DB plan a company pays in what is necessary and then you’re at the mercy of the whims of the market,” says Dunnett.

According to the firm the companies main unions, the Communication Workers’ Union (CWU) and Connect, have been consulted during the process of closing the DB plan.
“There hasn’t been a formal response from the_unions but we have decided this in consultation with them, and I’m not aware of any objections,” Dunnett says.

The unions issued a statement at the beginning of the year, after BT announced its decision to close the DB scheme, in which they said that recent developments in the scheme were causing “considerable “ concern for the unions.
Apart from the adoption of a money purchase pension plan, the unions pointed to the valuation of the old scheme, which showed a 3% (around £1bn) deficit for 2000.

The introduction of the new scheme does not entail any changes in the investment policy of the pension schemes, says Dunnett.