The U.K. government said it will continue to protect BT Pension Scheme participants from BT's Openreach subsidiary, which will transfer to a new Openreach pension fund after it is separated from parent company BT Group.
The government on Wednesday proposed an amendment to the Digital Economy Bill that would introduce authority to maintain the so-called crown guarantee, a pension protection for any BT Pension Scheme participants who would end up transferring to Openreach after the separation is complete.
The move follows the decision taken last week by British communications regulator Ofcom to make Openreach, the telecommunications infrastructure arm of BT, a distinct company with its own staff, management, purpose and strategy.
According to the £43.1 billion ($53 billion) BT Pension Scheme's website, about 32,000 employees will transfer to the new Openreach Ltd. once pension arrangements are in place.
When BT Corp. was privatized in 1984, the U.K. government protected the participants of BT's defined benefit plan with a crown guarantee, which ensures that BT's ongoing contribution obligations to the pension fund would be met by the government in case of BT's insolvency.
“The legal separation of Openreach is important for delivering better broadband for consumers throughout the U.K. A more independent Openreach, which treats every broadband provider fairly, should increase investment, bolster competition and help give the country the connectivity it needs,” said Karen Bradley the secretary of state for culture, media and sport, in a news release.
