BT pension deficit overshadows profits increase

Pension deficit towers over profits increase

BT has announced third-quarter pre-tax profits of £209m, up from last year's figure of £81m. Third-quarter revenue was down four per cent at £5.2bn from 2008's £5.4bn.

However, BT's largely successful cost control programme was overshadowed by the size of its pension scheme deficit, which BT and the Trustee of the BT Pension Scheme (BTPS) agreed was "£9bn as at 31 December 2008".

In a statement announcing the triennial funding valuation of its pension scheme, BT admitted that the Pensions Regulator to which it would submit the valuation would "have substantial concerns with certain features of the agreement".

The Pensions Regulator will now review the agreed valuation "with no specified time limits", said BT in its statement, adding, "In the event of the Pensions Regulator disapproving of the arrangements, it is referred to an independent Determination Panel. Appeals from this go to the Pensions Regulator Tribunal and then the Court of Appeal."

There is a 17-year recovery plan during which BT hopes to sort out its pension deficit. It will make deficit payments of £525m per year for the first three years, £583m for the fourth year, and then increments increasing at three per cent per year.

Last December UK comms regulator Ofcom launched a consultation into how BT's pension scheme costs would affect wholesale costs that its infrastructure-providing arm Openreach would charge other ISPs.

A further consultation on BT's pension costs will follow in spring.