The telecommunications firm plans to raise its contributions from the current level of 5%. It will match employees' contributions into the scheme and add another 2%, to a maximum of 9%.
So if an employee contributes 5%, they will receive 7% back from BT. But if they contribute 8% or 9%, BT will contribute 9% in return.
According to BT's group pensions manager Kevin O'Boyle, it is an individual employee's fault if they do not save enough for their retirement, but it is up to employers to make it easy for them to save.
Speaking at the National Association of Pension Funds (NAPF) Annual Conference in Manchester yesterday, O'Boyle, who is responsible for more than 150 pension schemes at BT, told delegates: "Companies have to realise where their paternal responsibility lies regarding pensions. We want our staff to be more responsible, so we give them the tools and opportunities to do this."
Following the closure of BT's defined-benefit pension scheme (which was at the time the biggest in the UK) in 2001, the company launched a defined-benefit scheme and since then O'Boyle has been tasked with improving the pension provision for staff.
Since 2001, the firm has implemented a salary-sacrifice arrangement to save employees National Insurance Contributions and tax on their pension contributions, auto-enrolled all 18,000 members of staff into a pension scheme and given staff pension communication through web casts, face-to-face meetings and a helpline.
"The majority of staff will still go into a default pension fund," he added. "But we have given them enough information to make informed choices."