The government has committed to maintaining the Crown Guarantee on the BT Pension Scheme, even for members who will transfer to the new Openreach company.

Labour MP for Hove, Peter Kyle, asked the government to confirm when it plans to issue guidance to clarify the extent to which the Crown Guarantee covers existing pension payments of BT employees and future pension payments of BT employees.

In a separate question, he asked whether in the event of BT entering insolvent winding up, 100 per cent of BT Pension Scheme claimants' pension payments will be paid under the Crown Guarantee.

In response to both questions, Conservative MP for West Suffolk Matt Hancock, and Minister of State for Digital, said it is committed to maintaining the guarantee. “The Crown guarantee, given when BT was privatised, covers liabilities of BT plc to the BT Pension Scheme in the unlikely event of BT entering insolvent winding up.

“We are committed to maintaining the Crown guarantee’s existing pension protection for the future accruals of pension benefits of BT Pension Scheme including those members who transfer to the new Openreach company as a result of BT's voluntary agreement with Ofcom,” he wrote.

“The Digital Economy Act 2017 includes a provision to ensure this protection will extend to the pensions of members transferring to the new Openreach company. We are now in the process of drafting a Statutory Instrument to implement the necessary changes to legislation. The Statutory Instrument will be laid before this House.

“The current protection afforded to members who continue to be employed by BT plc; pensioners; their eligible dependents; and members of the Pension Scheme with deferred rights, will not be affected by the new legislation.”

The government originally committed to a Crown Guarantee when BT was privatised in the eighties. A 2014 ruling by the Court of Appeal reiterated that the government remains responsible for funding the BT Pension Scheme in the event of insolvency.

However, the issue of the Crown Guarantee was brought back into the limelight last year, during a debate to formally separate Openreach from BT. Established in 2006, Openreach is the part of BT’s business that controls the network that runs from the local exchange to people’s homes and businesses. BT allows other communication providers to use this network and has over 560 communication providers using its network.

However, pressure had been mounting from other big communications providers such as Sky, Vodafone and TalkTalk following accusations that the current system does not allow for a competitive market.

BT argued that such a separation would have a big impact on the pension scheme and it was argued that there would need to be new legislation put in place to assure that members who transfer to the new Openreach company will be protected by the Crown Guarantee. Despite this, in November 2016, Ofcom issued a formal notification to require the legal separation of Openreach from BT.

Earlier this year, The Pensions Regulator said it was working with Ofcom to understand what impact there will be on the BT pension scheme over Ofcom's decision.

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