22 October 2010
The High Court has stated that the government must support the
BT Pension Scheme should the company become insolvent.
The ruling was in relation to a "crown guarantee" that was given
when BT was privatised in 1984.
This decision means that scheme members who joined before and
after the privatisation are covered by this guarantee.
Currently the BT Pension Scheme has a £9bn deficit with
approximately 340,000 members in the scheme.
The BT Pension Scheme trustees said:
"The crown guarantee requires the UK government to pay any
outstanding liabilities, transferred to BT on privatisation, for
the payment of pensions [in the event of insolvency],"
BT said:
"The key point in the judgment is confirmation that, in the
unlikely event of BT becoming insolvent, the Crown Guarantee can
cover members who joined the BT Pension Scheme both before and
after privatisation. A further hearing is expected to resolve some
outstanding points of detail."
"Additionally, the extent of the Crown Guarantee should be
calculated on a 'buyout' basis (i.e. the cost of buying annuities
to fund the liability) rather than the outstanding deficiency
contribution payments under the recovery plan."
