BT Group (LON:BT.A) has lost a legal offer to change its pension scheme, the Guardian reported. The former telecommunications monopoly had tried to change the index used to calculate the pension increases paid to members of “Section C” of its defined benefit pension scheme.
BT’s share price slipped into the red in today’s meeting after falling 0.67 per cent to 259.15 pence. However, the share has outperformed the broader market sell-off, which has seen the FTSE 100 benchmark index fall 1.10 per cent to 6,945.19 points by this morning.
BT loses pension challenge
The Guardian reported yesterday that the Court of Appeals rejected BT’s request to change the way BT calculates pension increases, a move that would have affected more than 80,000 members of the system. The phone company currently uses the Retail Price Index (RPI) for members of “Section C” of its defined benefit pension scheme, but believes the rules allow it to switch to a different index under certain circumstances. Sections A and B of the scheme are linked to the Consumer Price Index (CPI).
This step was taken after the Supreme Court ruled in January that it was not possible to switch to another index, and the Court of Appeal has now confirmed this ruling.
“We are disappointed with the outcome and will now review the ruling in detail to decide on the next steps,” said BT, as quoted by The Guardian.
Update on Analyst Ratings
Barclays reaffirmed BT’s “balanced” position yesterday without setting a price target for the shares. According to MarketBeat, the former telecommunications monopoly currently has a consensus rating of “hold” and an average target price of 272.67 pence.
Goldman Sachs, meanwhile, was optimistic about blue-chip telephony, arguing that the company was trading at an “increasingly unjustified” discount to its competitors.
At 08:58 GMT on Wednesday 5 December, BT Group plc’s share price was 260.40 pence.