BT Pensions Review
Members should have received a further communication from BT confirming that the company have agreed after further discussions with Prospect that their employer’s contribution into the BTRSS will increase to 10% for all employees who contribute 5% or 6%, not just those contributing 7% or more which is what was agreed previously.
Members will also be aware that there is now more clarity on the future arrangements applying to team member grades that are currently in the BTPS.
BT have said that further communications and information on the BTRSS and other proposals arising from the review will be sent to managers over the coming weeks and the Your Rewards system will open in early May to enable members to make contribution changes for June onwards.
As well as the significant changes to pension provision within BT, there are some recent pension developments driven by government that it is important to update you on.
Potential changes to State Pension Age
State Pension Age is important because it determines when state pension benefits become payable. Government is trying to move the goalposts in a way that could increase State Pension Age for millions and even result in a State Pension Age of 70 for anyone under 30.
There is some consensus that State Pension Age might have to change to reflect increases in life expectancy. If we are living longer, payment of state pensions might have to start later to ensure the system remains sustainable.
However when this approach to State Pension Age was introduced, the principle underpinning potential changes was that future generations could expect to spend “up to a third” of their adult lives over State Pension Age. Last summer the government announced that it intends to reduce that proportion to “up to 32%”.
This may not seem like a hugely significant step but it would, for example, mean:
- State Pension Age reaching 69 by April 2042 rather than April 2055.
- State Pension Age reaching 70 for anyone born after April 1986.
Prospect is strongly opposed to this proposed change and is lobbying against it. You can support our efforts by signing a petition started by Mike Clancy, Prospect general secretary:
https://petition.parliament.uk/petitions/207603
This issue affects millions of people so please forward the petition to friends and colleagues who are not in Prospect and share it on social media too.
Changing the index used to increase defined benefit pensions from RPI to CPI
This issue has a long history and members of the BT Pension Scheme will be aware that the index for increasing pensions in payment for Sections A and B, and for increasing pensions in deferment in all three sections, switched from RPI to CPI from April 2011. Members will also be aware that earlier this year the company lost in the High Court when they argued for the right to switch from RPI to CPI for members of Section C of the scheme. There has been recent speculation that government is considering giving all employers the right to unilaterally switch the index for pension increases without agreement from members, trustees or the courts. I recently wrote to the pension minister to express Prospect’s strong opposition to any such proposals. You can read more about the issue from this link:
I am pleased to say that in the Government White paper published yesterday the following paragraph appears to rule this out;
‘We are committed to protecting members’ pension benefits, and are presently ruling out measures which would override provisions in scheme rules and allow employers, or schemes, to change the measure of inflation used to calculate annual increases. However, we will continue to monitor developments in the use of inflation indices.’
The stronger we are, the louder and the more effective our voice – please do speak to any of your colleagues who are not members of Prospect about the importance of joining us at this time. It is easy to join Prospect online at: www.prospect.org.uk/joinus