BT denies it needs ?1.5bn pension plug

BT yesterday moved to quell fears that it will have to make a massive one-off payment into its pension fund to deal with an ever-deepening funding black hole.

The company's auditor, Watson Wyatt, is still carrying out a five-month audit of BT's pension fund, which has 346,000 members and is one of the largest in the private sector.

Earlier this month BT insiders indicated that the fund could be as much as £2.5bn in the red, compared with £1bn three years ago, because of the decline in the value of shares since the heady days of the dotcom boom.

The company's triennial funding valuation is calculated using everything from share price levels to property values. The current audit is expected to be completed by May.

When the last triennial audit was carried out the company increased its annual payment into the fund by £200m over five years.

That payment is expected to increase slightly, with BT rolling its top-up payments over a longer period in order to boost the fund.

Speculation that the company will have to make a £1.5bn one-off payment to cover liabilities was denied yesterday.

"Our actuaries have indicated to us that they see no reason for us to significantly increase our annual top-up payments," a BT spokesman said.

The collapse in share prices across the world has left a number of leading British companies, including Rolls-Royce and British Airways, nursing large pension fund deficits.

Many companies which had been able to take "pension holidays" are finding it necessary to pour money into their funds in order to cover recent losses.

Pharmaceuticals group GlaxoSmithKline, which employs more than 100,000 people, recently announced its fund was £1.3bn in the red.