BT faces £17m bill for pensions protection

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The European Commission today ruled that the UK Government had been wrong to exempt the former British Telecom from the guarantee scheme.

BT has already set aside £16.6 million to cover all the payments due since the Pension Protection Fund was set up in 2004. It has yet to put aside a payment for the year that ends in March.

A spokesman said it was "quite likely" that BT would appeal against the ruling and the amount involved.

BT was given a state guarantee on its pension liabilities when it was privatised in 1984. When the Pension Protection Fund was established, the law exempted firms with state guarantees from paying the levy on those parts of their liabilities.

That means that since 2004 BT has paid no levy on behalf of people it employed before 1984, but has on those taken on since then.