THE COMMUNICATIONS BLOG


Welcome to the Birchills communications blog

News and Views on Communication Today



BT £500m Mistake - The Communications Blog - Birchills Telecom

BT £500m Mistake - The Communications Blog - Birchills Telecom

Go to content

BT £500m Mistake

Birchills Telecom
Published by in News ·

The consultants employed by BT have  dropped a bit of a clanger. The actuary miscalculated telecoms company pension liability by £500 million. BT explained it was an isolated human error representing less than 1% of the total pension liabilities of about £57 billion. BT said that it would have no impact on  cash flow or dividend to be paid or on its 2017 triennial funding valuation pension or contributions to scheme members.

The pension deficit stood at an estimated £3.9 billion at the end of June. It does lead one to question whether that's was really £3.4 billion or £4.4 billion. The discrepancy may only be 1% of the total liability but it is some 13% of the deficit. Given this fact it is difficult to see why BT are so blasé about the situation.

BT who still employ around 100,00 people has one of the largest private sector pension schemes. The number of people actually in the scheme is difficult to come by but it would be reasonable to put it around half million people. Uniquely the BT pension scheme continues to be underwritten by the government as part of the privatisation deal that was agreed in the 1980s.

BT revealed the error in the first quarter trading update in which it said there is it been assured that the actuaries qualification of the error was accurate and there were no other errors. BT went on to say that they were undertaking further review procedures around the calculation.

The actuaries are Willis, Towers Watson and they said they had stringent controls in place to confirm the accuracy of  calculations that they provide to clients and the error has been corrected . Given that BT are carrying out further checks and the magnitude of the error it would seem that the stringent controls were not sufficient.

Willis, Towers Watson  are a major global advisory, broking and solutions company. They recently  announced financial results for 2017. Total Revenues were $8.2 billion for the 12 months ended December 31, 2017, an increase of 4% (as compared to $7.9 billion for the same period in the prior year.

BT made no comment on their continuing relationship with Willis, Towers Watson .

This mistake is BT's latest issue with external advisers.  PWC was replaced as replaced as auditor in the wake of the Italian business accounting scandal.

BT had a trading update on Friday the 27th of July, when they announced a 1% increase in earnings. Their shares rose some 5% to close at 236p.




No comments

Back to content

Birchills Telecom are proud members of the organisations below