UK telco BT said on Monday that “under a new and more conservative actuarial methodology,” its pension deficit has been recalculated as £3.4bn, considerably higher than previously thought.

Under the new scheme, BT will make deficit payments equivalent to £280m per annum for 10 years with the first three years instalments paid up front.

The operator will make an advanced payment of £840m, representing three years’ instalments of £280m, into the scheme by the end of April – £500m of which is to be paid in this month.

Apparently, the so called Crown Guarantee has not been taken into account. The guarantee is an insurance policy taken out to protect the pensions of BT staff should the company go under. The guarantee is understood to have been granted when the company was privatised in 1984, but BT is still arguing the point with the Department for Trade and Industry over the extent of the guarantee’s coverage. BT argues it should cover 75 per cent of the scheme.