Re: Another option to tackle the pension deficit
Another option to tackle the pension deficit
is for BT to pay less to shareholders and more into the scheme. Tada! problem solved.
No really.
What would happen then is that shareholders would sell (NPV is a DCF of all future distributions). The share price would fall. Their borrowing cost would go through the roof as a result. The investment in R&D, infrastructure etc would bottom out. That'd lead to cutting costs, so redundancies. Lots of them.
Now, there's a fair argument that unsustainable businesses should be allowed to fail, and they should, but the pensions lifeboat for DB schemes can't support the deadweight of BT, and so all those pensioners that thought they'd won would find out they'd lost. By lost I mean mandatory haircuts on payouts, and no indexation of payments made before 97, with a 2.5% cap on those coming after.
In short, it'd completely and utterly screw over the current staff, the shareholders, the bond holders, and the pensioners. Nobody would win.
I realise you won't like what I've written, but it remains true whatever your feelings about it.
Biting the hand that feeds IT
