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Form an orderly queue, people: 31,000 BT staff go to Openreach in October

Doctor Syntax Silver badge

"BT stopped paying into it in the 90's creating a 12-14bn deficit."

No. This has been explained here many times before.

The IR (as then was) stopped BT paying into the pension scheme. This was because the projections at that time were that there was sufficient money to meet obligations. Continuing to pay in would have been considered tax avoidance by the IR.

Then two things happened.

1. Gordon Brown stopped tax relief on dividends paid on shares held in pension funds. That meant that the funds wouldn't experience the growth on which the projections were based.

2. The great house price bubble, steadfastly ignored by the BoE when setting interest rates (on the orders of the said Gordon Brown), led to the crash of 2007. Since then interest rates fell to near negligible and have stayed there. Pension projections depend on annuity rates. Annuity rates depend on interest rates. The annuity rates on which the '90s projections were based have been hopelessly wrong for more than a decade and don't seem likely to improve any time soon.

The IR's calculations in the 90s didn't take these changes into account. Nobody there had read the small print at the bottom on any financial product to the effect that past performance is no indication of what will happen. In consequence there's been a big hole in the pension scheme ever since entirely as a result of the payment holiday forced onto BT not allowing for HMG's capacity for screwing up the UK finances for a couple of decades between then and now and on into the foreseeable future.

Not that I expect an explanation here will prevent the marginally informed bleating about it all being BT's fault.

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