BT Admits to Copper Bottomed Guarantee

BT has said that three quarters of its £37bn pension liabilities – around £28bn – are covered by a ‘Crown guarantee’ granted at the time of its privatisation.

The company said it has delayed its three-yearly review of its pension funding situation so the trustees and actuaries Watson Wyatt can assess how the guarantee would interact with new regulation.

The guarantee had remained in obscurity but has come under the spotlight in the last few weeks because BT argues it should pay reduced levies to the government’s new Pension Protection Fund because of the safety net.

But drawing attention to the guarantee could also encourage private equity bidders – previously deterred by its multibillion pound pension deficit – to come out of the woodwork.

BT said its shortfall had fallen to around £2.5bn at the end of March this year, from £4.7bn in 2004.

The Department of Trade and Industry is in talks with BT over the scope of the guarantee, which would kick in if the phone company were to become insolvent.

Taxpayers are also underwriting other former nationalised industry pensions, including the Railways Pension Scheme.

The following two tabs change content below.


Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nam dignissim magna vitae dui posuere eu feugiat augue eleifend. Fusce sed tincidunt quam. Donec varius aliquam metus ut semper. Donec augue purus, feugiat interdum malesuada vel, aliquet quis massa. Nulla facilisi. Nam vel ante quam, et tincidunt dui. Maecenas venenatis libero eu nulla tincidunt et accumsan velit sodales. Nam congue mauris et felis porttitor blandit. Nam eget tempor massa. Nullam suscipit gravida eros, ac suscipit magna feugiat sit amet.

Latest posts by admin (see all)