Re: Seems bizarre to me...then I'll try and explain
As a public sector entity they had an un or under-funded pension scheme, but that "didn't matter" because like all public sector pensions, the cost would be stiffed to future tax payers.
You are right to lay the blame for the pension black hole at govts. door but not at that particular door. At one stage the fund was deemed to be in surplus and HMRC - or probably IR back then - ordered BT to take a contribution holiday. Over funding is considered to be a form of tax evasion.
As all state pensions, including Civil Service pensions, are run as a Ponzi scheme the tax authorities don't really grok the extreme long term nature of pensions funds. The valuation of a pension fund is based on what it would cost to turn the liabilities into annuities and this is based on interest rates. Annuities are also based on life expectancies and increases in those need to be allowed for when looking to the long term.
What's not taken into consideration is that interest rates can go down as well as up. So when interest rates went down and stayed down as a result of a financial bubble, for which Treasury policy and their sometime political head Brown must accept some responsibility, the valuation on which the taxman's decision was based was shown to be wildly optimistic. Increased life expectancy has further hit annuity rates. In consequence BT is committed to making large contributions trying to catch up. It's not simply a matter of paying what it wasn't allowed to pay before because the fund has lost any stock market and income gains from the contributions that weren't made back then and that also has to be covered.
Another factor was the withdrawal of pension funds tax relief on dividends*, another of Brown's bright ideas. The dividends contribute to growth of the funds and this contribution was cut by removal of the tax relief. It clearly amounted to taxing the future and that future is here. It did a lot of damage to pension funds in general, not just BT's, and is one reason why there are few defined benefits schemes left.
As things stand the best we can hope for is that as interest rates rise the annuities will offer better prospects and the hole will be at least partly dealt with due to that.
* I thought then, and still think, that the pension funds were culpably supine back then. They had offered projections of future value based on the tax regime as it then was. When the regime altered they should have presented members with valuations which showed the difference between what was now projected and what would have been projected under the old legislation if only to cover their own backs and explain why things were looking less rosy. The fact that it might have put political pressure on Brown by exposing the long term consequences of his actions would, of course, have been a fortunate by-product. I notice reports suggesting that the recent budget has sneaked in another technical looking change that will affect some saving schemes in the long run. The Treasury got away with in 20 years ago, why would they not expect to succeed again?