12 months ago, BT spooked markets, and provoked all kind of pension related fears when it announced a £4.7bn pension deficit. Today, the deficit could be a little as £0.5bn, but the UK government a lot worse off.
The company had managed to slash the deficit through a combination of growth in the value of the fund through the rise in equities and a series of capital injections. Then yesterday it revealed news of a “Crown Guarantee.” Apparently, when the company was privatised in 1984, the government agreed to back the pensions of all those working for the company at the time, in the event that the firm went bankrupt.
The Dti is not over keen on this revelation and is likely to do al it can to fight this claim.
In fairness we should point out, that this deficit relates to what would be owing should the company go bust. Stranger things have happened, but this is not especially likely, and BT chairman Sir Christopher Bland, said: “BT stands fully behind its pension promise to pensioners and members. The existing Guarantee, which applies only on a winding up of the company, represents an added reinforcement to the company’s covenant and an extra layer of security for BT’s pensioners. The scheme is well-managed and assets have grown very strongly in recent years.”
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