BT Group Pensioners Seek Court Clarification of Scheme Guarantee
BT Group’s pension trustees have asked a court to rule on the amount that the pension plan, which is the largest in the UK, and its £9 billion deficit will be taken control of by the government if the company collapses. The plan was guaranteed by the government when the group was privatized in 1984, according to Alan Steinfeld, an attorney for the pension plan.
Steinfeld said that the plan has 344,000 members, £31.3 billion in assets but £40.4 billion in liabilities. This puts the the scheme with a £9 billion deficit, but the trustees reported a £7.6 billion shortfall last month.
BT Group is committed to contribute £525 million to repair the deficit. However, a court ruling is rumored to allow the pension trustees to reduce the contributions when the next valuation of the plan is made in December next year. The company says that the case is purely legal and technical and that any comments about the court ruling’s impact on future payments is only speculation. The ruling is to help the BT Pension Scheme trustees seek clarity on the guarantee from the court, and the company is only a defendant as a technicality, BT added. A decision from the High Court is expected in October this year.
The trustees say that the Crown Guarantee includes all plan members whenever they joined. However, the government argues that they aren’t liable for each member, explaining that the guarantee isn’t like a blank check.
Meanwhile, BT had recently been threatened with a strike by the Communication Workers Union over pay…that is until they managed to make a deal. This new 39-month offer will give staff a 3% rise in pay every financial year, starting April 2010 and ending March 2013.