BT have made an early payment to their pension fund so that they will benefit from next year’s reduced rate of corporation tax.
The move, which they estimate will save them £10million, follows last week’s budget announcement that corporation tax would drop from 28% to 26% next year.
By making the payment this year, instead of December as planned, the company will report lower profits, and thus pay less tax, instead announcing higher profits next year when the tax rate will be lower.
The telecoms giant released a statement yesterday saying, “As a result of the acceleration, BT has made a cash payment of £505m into the BT pension scheme, being the actuarial value of the £525m due to have been paid in December 2011.”
BT have agreed to pay £525million a year for the next three years into its struggling pension fund, which is one of the biggest of its kind in the world.
The pension fund once had a deficit of £9billion, but this has improved to just £3.7billion as the markets have recovered and BT have a 17year plan to balance the pension funds books.
BT closed the final salary scheme to new employees in 2001, but still offer a generous scheme to employees and will hope the scheme continues to cut its deficit.