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interestrateripoff

Taxpayers Face £22Bn Bill If Bt Goes Bust

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http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/telecoms/8079404/Taxpayers-face-22bn-bill-if-BT-goes-bust.html

The High Court yesterday ruled that the Government must guarantee to provide the pensions of almost all the 340,000 members of BT’s indebted pension scheme .

The landmark “crown guarantee” ruling means BT would have to make good any deficit in its pension plan if the company ever went bust. The £54bn pension scheme, the UK’s largest, was £22.8bn in the red at its latest triennial valuation in December 2008.

Experts said the ruling was a “victory” for BT, and its pensioners, because the guarantee was only expected to apply to people who worked for BT before it was privatised in 1984.

However, Mr Justice Mann ruled that the “guarantee is not limited to those who were members of the scheme at the time of the transfer” and that all staff who joined the company after privatisation, but before the scheme closed to new members in 2001, are “capable of being included”.

John Ralfe, an independent pensions expert, said the ruling means the guarantee has a “much wider application than anyone thought” and applies to post-privatisation employees “which was not intended by the Conservative government” when it privatised the former telecoms monopoly.

He said taxpayers could question why they have been made responsible for the pensions of employees who joined BT after it was privatised. The Chancellor confirmed this week that the pension age will rise to 66 in 2020, from the current 60 for women and 65 for men.

Mr Ralfe, who has been hired by BT’s rivals to analyse the company’s pension scheme, said the taxpayer would be “on the hook” for £7.3bn rather than £22.8bn if the guarantee was applied to only pre-privatisation members.

Paul Howard, an analyst at JP Morgan Cazenove, said: “We believe this is the best possible result for BT’s pension scheme members and will provide the scheme’s trustees with a huge degree of comfort.”

Another little bonus for the taxpayer, if BT fails we get another giant turd to contend with.

So I assume with this BT was only viable for privatisation if the pension scheme was removed from shareholder responsibility? Excellent.

I would also assume that this liability will be off balance sheet for the govt and will only suddenly appear if BT have crap management who bankrupt the company?

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My understanding is that some numbskull high court judge with probably 0 experience of the real business world has decided that not only should the crown guarntee on BT employees pensions cover those employeed at the time of privatisation (seems fair to me) but also include those who joined after privatisation into the final salary scheme. What a stupid decision! He probably isn't aware of the massive final salary payoffs they were giving employees to leave or the pensions payment holidays they took that are part of the reason the scheme is in deficit!

The thing that annoys me is that as employee of a company with a former final salary scheme in big deficit, whilst I'm in the El Cheapo money purchase, I resent all these additional deficit payments the company keeps making to the final salary scheme as it means less money for my pay rise, or even employing more people so I don't have to work as many additional hours.

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Privatise the profits, socialise the risks. That's capitalism.

Yup.

Did anything in the last 30 years truly get privatised? As far as I hear everything has been subsidized by taxpayer money in one way or another ever since.

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The government will like this, it means they get their hands on the £30bn of assets that are held by the pension fund.

The BT pension holders need to ask themsleves whether they trust the government's finances, it's better to have 60% of something rather than 100% of nothing.

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The government will like this, it means they get their hands on the £30bn of assets that are held by the pension fund.

The BT pension holders need to ask themsleves whether they trust the government's finances, it's better to have 60% of something rather than 100% of nothing.

Why do you think the government will get the assets? I think the pension scheme trustees would have something to say about that.

the governemt is getting the bill, not the menu.

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Anyone know how much the bosses paid themselves by way of bonuses recently?

http://www.belfasttelegraph.co.uk/business/business-news/union-fury-at-bt-bonuses-14820660.html

Chief executive Ian Livingston is entitled to a bonus of up to £1.6m — two times his £800,000 salary — if all financial targets are met.

http://www.guardian.co.uk/business/2010/may/23/bt-bonus-executive-pay

BT chief's £1m bonus enrages union as strike ballot looms• Communication Workers Union is pursuing a 5% pay rise

• BT has cut 35,000 jobs over past two years

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Yup.

Did anything in the last 30 years truly get privatised? As far as I hear everything has been subsidized by taxpayer money in one way or another ever since.

I find it strange that the Tories want to give Thatcher a 'state' funeral! Slight irony there..

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http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/telecoms/8079404/Taxpayers-face-22bn-bill-if-BT-goes-bust.html

Another little bonus for the taxpayer, if BT fails we get another giant turd to contend with.

So I assume with this BT was only viable for privatisation if the pension scheme was removed from shareholder responsibility? Excellent.

I would also assume that this liability will be off balance sheet for the govt and will only suddenly appear if BT have crap management who bankrupt the company?

Moral Hazard? Dont Judges understand what this means?

From Wall Street 2 - "Moral hazard is when they take your money and then are not responsible for what they do with it.”

So how is the taxpayer responsible for how BT looks after its private pension fund? Uhhhh, it isnt.

As the Fund is now Guaranteed by the taxpayer, they might as well take the assets of the fund to Las Vegas, bet the lot on Red. If it loses, no problem, taxpayer has to pay.

The whole point of privitisation is that individual players, not the taxpayer, takes the risk. And that includes all of the pension fund. The only reasonable response here is for Parliament to legislate against this ruling specifically, and with it brush aside any human rights considerations. After all, what about my human rights, why am I now on the hook for a private debt that has nothing to do with me?

This ruling is so mad that it the judge needs to be sectioned for the benefit of humanity.

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Why do you think the government will get the assets? I think the pension scheme trustees would have something to say about that.

the governemt is getting the bill, not the menu.

If the pension fund is being taken over the government will manage the scheme, the same would happen with the Royal Mail if it's privatised:

He also knows that nationalising the pension fund means the current Government gets to grab its assets – shares, bonds and real estate worth about £26bn today – while leaving politicians, perhaps as yet unborn, to pick up the fund’s promises to pay liabilities currently estimated at £34bn.

My link

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I find it strange that the Tories want to give Thatcher a 'state' funeral! Slight irony there..

Aren't state funerals reserved for people to true historical importance (Monarchy excepted), Churchill I can understand however Thatcher?

Edit to add

Surely by this measure Blair / Brown should be given state funerals for their achievements.

Edited by interestrateripoff

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I find it strange that the Tories want to give Thatcher a 'state' funeral! Slight irony there..

[/quote

She was the 'best' thing they had in the last 50 years. Look at the present rubbish.

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* Privatise (generating humungous bankstering fees)

* Spunk away the sale proceeds on tax cuts for the wealthy

* Skim scam the ponzi profits for as long as the scam can be strung out

* Dump the accrued (hidden) losses back onto the taxpayer

* Keep the assets to sell to the highest bidder generating humungous bankstering fees

Thatcher's finest hour. :rolleyes:

A scam's a scam whether it's a tory scam or a labour scam. It's still a scam.

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If you want to understand the logic behind the decision, you need to understand how pensions are handling in the event of failure.

The problem stems form money being in a "pot".

In the event of failure, first, the members in retirement get paid out in full. Once they've been paid out, any money left is shared out based on how close people are to retirement. Then the government would make whole the pensions of anyone with a shortage.

If the government guaranteed the pension from pre-privatisation, but not the others PAYED FROM THE SAME POT, the government would effectively be instantly erasing the pensions of employees who joined post-privatisation, while promising to make whole the pensions of people who joined a week earlier. People would be contractually obliged to continue to pay into the pension fund despite having already been told they will never receive any money out.

It's a stupid situation that should never have happened in the first place.

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* Privatise (generating humungous bankstering fees)

* Spunk away the sale proceeds on tax cuts for the wealthy

* Skim scam the ponzi profits for as long as the scam can be strung out

* Dump the accrued (hidden) losses back onto the taxpayer

* Keep the assets to sell to the highest bidder generating humungous bankstering fees

Thatcher's finest hour. :rolleyes:

A scam's a scam whether it's a tory scam or a labour scam. It's still a scam.

It's not Thatcher's fault if some dipstick judge rules that the taxpayer has to pick up the tab and the government of day lacks the balls to tell him to stick it.

She proved that she wouldn't subsidise loss making industries with the miners thing, the current Tories aren't in the same league. There's no way they'd go head to head with the VI's that want to bankrupt this country, they'll buckle and hand out the cash every time: like a weak parent that's too afraid to say no when their kid demands a sweetie.

Edited by Chef

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  • 140 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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