Crucial court date for BT over pension deficit
TELECOMS giant BT will this morning begin a court case that could have a momentous impact on its future.
Trustees of the firm’s pension plan are seeking a ruling on how far the government will underwrite the bloated scheme.
If the ruling goes in the trustees’ favour BT will have to pay significantly less to service the £9bn deficit it is carrying.
Shareholders will be praying for this outcome, after the firm cut its dividend by 59 per cent, partly in response to the bulging deficit.
A ruling the other way could spell disaster, with BT potentially having to address the issue faster than it had planned.
Earlier this year BT agreed with its pension fund trustees the deficit would be paid off over 17 years. It will pay £525m for three years, rising to £583m thereafter, with payments increasing three per cent a year.
BT last week averted strike action when it announced it has reached agreement with its workers’ union on a new pay package for employees.
The agreement will see workers receive pensionable pay rises worth three per cent each financial year from April 2010 to March 2013.