BT today said that the government will guarantee an estimated 75% of its pension fund liabilities, currently worth about £37bn.
The state protection for BT’s pension liabilities falls under the terms of its 1984 privatisation.
The agreement includes a “Crown Guarantee”, which underwrites the retirement benefits of 262,000 pensioners.
The guarantee, which will only be triggered in the unlikely event that BT is declared insolvent and its pension scheme wound up, applies to those members of staff and pensioners who joined BT’s final salary pension scheme prior to its privatisation in 1984.
However, the safety net does not apply to the 97,000 pension scheme members who joined after privatisation.
The company closed its final salary scheme to new members in 2001. Staff who have joined its new, defined benefits scheme since then are also not covered by the guarantee.
BT, which has a £2.1bn deficit on its scheme, said it would update investors about potential changes to how it funds its pension schemes in the next couple of months, after a three-year actuarial review of the schemes is completed.