BT Group pension guarantee upheld

The Court of Appeal has upheld a 2010 High Court judgement that the government would fund BT Group’s defined benefit pension obligations for all 313,000 members, regardless of whether an employee joined the organisation pre or post-privatisation.


In 2010, the High Court ruled that the government would take responsibility for the technology organisation’s pension scheme in the event it were to become insolvent.

BT was privatised in 1984 and the government had challenged the need to cover pensions agreed after this date, subject to two exceptions: that the government is not expected to pay benefits earned by a member while an employee worked at any other BT Group organisation; and in respect of benefits that have been augmented by BT.

In addition, the High Court decided that if BT were to become insolvent, the funding obligation should be measured with reference to the cost of buying out all the benefits with an insurance organisation.

The government appealed these decisions, but the Court of Appeal upheld the High Court decision that the crown guarantee covers BT’s funding obligation in relation to all members of BT’s pension scheme regardless of when they joined.

The Court of Appeal also decided that the funding obligation to which the guarantee relates is not measured with reference to the cost of buying out all the benefits with an insurance organisation, but instead by reference to the organisation’s continuing obligation to pay deficit contributions.

According to BT Group’s annual report, the pension scheme’s assets totalled £39.4 billion and liabilities £46.7 billion as at 31 December 2013.

The judgement said: “BT is a solvent and prosperous organisation and the prospect of it ever going into insolvent liquidation is remote.”

A spokesperson for BT said: “It is possible that the trustee, BT and the government all decide to take steps to appeal the judgement to the Supreme Court, the final appeal court in the UK.

“It is important to remember that the crown guarantee is only relevant in the highly remote circumstances that BT was to become insolvent.

“The scheme continues to have strong on-going support from BT in relation to the scheme and its members.”