Government has to guarantee BT pension plan
Friday 22 October 2010
The Government was told yesterday to insure almost every member of British Telecom's pension scheme in the unlikely event that the company goes bust.
The High Court ruling insures 98 per cent of the members of BT's pension plan against its insolvency The judgment clears up the uncertainty surrounding the so-called "Crown guarantee" which was offered by the Government when the company was privatised in 1984. BT has the largest defined-benefits scheme in the UK, with full liabilities most recently valued at £40.2bn. The Government argued that it should guarantee only those members who had signed up before privatisation, but yesterday's judgment extends the cover to those who have joined since.
BT's pension trustees said it was a "good result". BT said it "welcomed the fact that the judgment provides our employees and members of the BT pension scheme with further clarity regarding the extent of the Government's obligations".
The Department for Business, Innovation and Skills added: "We are currently taking legal advice based on this judgment and will decide next steps in due course."
BT pointed out the decision would have no impact on its agreed payments to the scheme, although some analysts suggested that the ruling might see the trustees accept less conservative funding plans in the future.
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