British Telecom under attack over pension funding strategy

British Telecom (BT) has today come under attack after a number of UK competitors stepped forward to make public their concerns about the proposed 4% increase in wholesale telecom prices. Despite the fact that the UK telecoms market has never been more competitive, BT is still central to the sector and controls the vast majority of wholesale services to the likes of BSkyB, Carphone Warehouse and Cable & Wireless to name but a few. So how will the 4% increase in wholesale telecom prices impact upon the BT pension scheme?

The current deficit in the BT pension scheme is in the region of £8.8 billion and the additional revenue raised from the 4% increase in wholesale prices will be used to pay down the deficit. Ofcom, the sector regulator, is currently considering the request from BT although this is something which has certainly split the sector. Competitors are flabbergasted that Ofcom is even considering the surcharge which would effectively see the likes of BSkyB, Carphone Warehouse, Cable & Wireless, etc, funding the BT pension fund deficit.

Whether you can argue that a reduction in the pension fund deficit using these additional funds would make BT a more secure operation in the future is debatable but one thing is for sure, the pension fund deficit needs to be addressed sooner rather than later.