The £309bn pensions precipice: Crippling shortfall of final salary schemes laid bare in wake of the British Steel and BHS crises

Britain's final salary pension funds are facing a crippling £309billion shortfall that could see them forced to increase emergency payments by millions of pounds a year.

The Pensions Regulator has revealed that the liabilities in these schemes have shot up by 35 per cent in the past three years, posing a threat to the retirements of tens of thousands of workers.

In some cases the Pensions Regulator estimates that one in five schemes will have to increase the extra payments they put in to these schemes by 300 per cent.

Threat: The Pensions Regulator has revealed that the liabilities in final salary pension schemes have shot up by 35 per cent in the past three years, posing a threat to the retirements of tens of thousands of workers

The figures come in the wake of the British Steel and BHS pension crises which have seen companies crippled by the payments they need to make to honour their retirement promises to employees.

One scheme of concern to many analysts is that of BT, which one expert believes could be facing a £1billion annual bill to plug the gap in its £10.6billion pensions black hole.

The shortfall in the £43billion BT fund – which is one of the largest in Britain – has increased by 50pc in the past 18 months, according to investment bank Macquarie.

Guy Peddy, telecoms analyst at Macquarie, said the fund had been affected by low interest rates and the fact that people are living longer – meaning pension funds are needing to pay out for longer. 

BT could need to hike its annual deficit payments by up to 38 per cent to make up the difference.

Macquarie’s findings, which come as politicians grapple with the pensions deficit at collapsed retailer BHS, will be troubling for both BT investors and the 300,000 pension fund members. 

Many already have plans to add extra money to ensure workers get the pension they were promised.

But the regulator found that on average the schemes needed to increase the sums they pay in by between 175 per cent and 200 per cent.

In more than one in five cases, schemes will need to pay in 300 per cent more than they currently do. 

A BT spokesman said: ‘Any interim estimates of the liabilities need to be treated with caution, as they make a number of assumptions based on today’s inflation and discount rates which will not apply at the time of the next valuation.

BT shares rose 0.75 per cent, or 3.15p to 425.25p.

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