£6 billion deficit

  oresome 20:37 12 Nov 2009
Locked

"BT’s rivals could soon be forced to help to shoulder the telecoms company’s huge pension deficit after a review by the regulator."

I am amazed that this significant cost has not been factored in to date. BT puts £525 million per year into it's pension fund.

  Forum Editor 22:26 12 Nov 2009

at the BT pension problem in context to get a real grasp of the situation.

The market value of the whole of BT is probably less than £10 billion, so a pension deficit of £6billion is a serious matter. It would be serious at any time, but it is particularly so now, because BT's net liabilities exceed its net assets by over £3 billion.

The only way a company like BT could 'factor in' the huge sums necessary to sort out the pension fund problem would be to abandon the share dividend. Instead, the company has agreed with the regulator that it will plough almost half the cash generated by the business back into the pension fund for the foreseeable future.

BT's shareholders might think they own the company, but really it's the pensioners who will have the attention of the senior management in the medium term - they'll have to manage the business with the fund payments in mind.

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