It currently matches contributions up to 10% of salary into its trust-based DC arrangement, but has pledged to raise this for its new group self-invested personal pension (Sipp), which launches in April.
It will also offer a unique underpin for lower earners that ensures them a minimum level of employer contribution.
The details of the structure are being sent to 20,000 of the firm’s DC members, following a long consultation with unions.
Part of the deal has seen BT pledge to use the savings made from dropping its trust-based DC arrangement for more generous employer contributions.
It has also pledged that there will be no member cross-subsidy in the Sipp arrangement and that members will only pay for the functionality they use.
The improved offer to employees coincided with the announcement that Standard Life would be the administration provider for the group Sipp.
Andrew Dickson, senior business development manager at Standard Life Corporate Solutions, praised the scheme’s auto-enrolment of new employees.
“That is not something we see too often – a genuine appetite for 100% participation from the employer,” he said.
Standard Life will offer an automatic rollover of shares purchased in the BT sharesave scheme.
Employees will also save stamp duty if they choose to hold the shares in the Sipp and sell them at a later date, as Standard Life has created a bespoke single-share tracker fund for the Sipp.
Kevin O’Boyle, head of pensions at BT, said: “BT selected Standard Life after a thorough review of the marketplace, in conjunction with our professional advisers PricewaterhouseCoopers. Standard Life was impressive throughout the whole process and I am confident they will provide a leading-edge, cost-effective solution for our employees.”
It is believed that Legal & General, JPMorgan Invest and Hargreaves Lans-down were also on BT’s shortlist.
To ensure good governance of the scheme, BT will be seeking an independent chairperson for a board of trustees.
