BT plans sweeping reforms to its £35 billion pension scheme as it seeks to chop costs after the telecoms giant’s shock profit warning last week.

It wants to limit future liabilities by increasing the retirement age to 65 from 60, upping staff contributions and basing payouts on a career average instead of final salary.

If approved, it would mean that 65,000 members of the scheme - one of the largest in the country - would have to work longer for less.

The reforms would bring BT into line with the Royal Mail, which was hit by strike action last year before workers approved a shake-up.

Talks are taking place with the Communication Workers Union and Connect, which represents BT managers. Proposals will be sent to members in the next few weeks at the start of a formal consultation.

BT’s pension trustees, chaired by Rod Kent, who led the ailing Bradford & Bingley before it was nationalised, must also back the plan.

It comes as investors fret that BT will be forced to cut its final dividend because of weak cashflows.

Chief executive Ian Livingston admitted earnings from its Global Services division, which runs networks for multinational companies, fell £80m short last quarter because it had failed to rein in costs.

Finance director Hanif Lalani is replacing François Barrault as head of the division, but Lalani will keep responsibility for BT’s pension fund during the delicate negotiations. Thousands of jobs will go.

Actuaries will carry out a three-yearly valuation of BT’s scheme next month. Analysts believe the stock-market slump will expose a giant funding gap. Robin Bienenstock, an analyst at Bernstein Research, estimates a £5 billion deficit and thinks trustees will demand top-up payments of £500m a year.

BT closed its final-salary scheme to new members in 2001. It has 65,000 active members, 275,000 deferred and close to 20,000 in a defined-contributions scheme.

Two years ago the company made an £840m one-off payment into the scheme and pledged 10 further contributions of £280m a year. The fund fell from a £1.4 billion surplus to a £600m deficit at the end of June.

BT said: “We have no intention of closing any of our pension schemes. This review is taking place in order to protect the scheme and its members. No final decision will be taken without further consultation.”

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