ASB rules could push BT pension deficit to £4.6bn

08 February 2008 / by None
New rules introduced by the Accounting Standards Board (ASB) could push BT's pension deficit up to around £4.6 billion.

The proposed changes from the ASB would require BT to report its retirement liabilities and assets and could dramatically increase the deficit which currently stands at £400 million, reports the Financial Director.

John Ralfe, an independent pensions consultant, said in a report for RBC Capital Markets that the new rules would highlight an area of BT's risk management which is being examined due to the scheme's reliance on equities to counter the shortfall, the Financial Times reports.

Mr Ralfe commented: "What gets measured gets managed, so increased transparency should change management behaviour and improve the management focus on pension costs and risk."

Central to the new proposals would be the recommendation that pension liabilities be discounted at a risk-free rate of return as opposed to the yield on corporate bonds, according to the Financial Director.

The ASB issues accounting standards under the Companies Act 1985.

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