BT loses High Court bid to reduce pension benefits

BT loses High Court bid to reduce pension benefits

The High Court has ruled against BT after the company went to the court in November to seek to reduce pension increases for certain members of staff.

The change proposed by the company would have directly impacted 8,000 Section B members of the defined benefit BT Pension Scheme – those who reach State Pension Age (SPA) between 6 December 2018 and 5 April 2021.

It would have reduced the benefits of this group by around £120m; with an average loss of about £15,000 per member. Younger members of Section B were also at risk of being affected, depending on future government decisions.

The challenge arose after the Treasury decided to protect certain increases for members of public sector pension schemes. Without that decision, members in these schemes would have lost part of the increase on a proportion of their payments known as the Guaranteed Minimum Pension (GMP).

The current rules of Section B of the BTPS require the trustees to follow the increases paid by public sector pension schemes under protections applied when BT was privatised in 1984.

The Treasury previously announced protection for people reaching State Pension Age from April 2016 to 5 December 2018 and BT did not challenge these increases. But it challenged extending the protection to people reaching State Pension Age between 6 December 2018 and 5 April 2021.

BT argued that members of Section B of the BTPS enjoyed a windfall gain due to the link in the scheme rules to public sector pension schemes. The company wanted the High Court to force the Treasury to protect public sector members in a way that did not require BTPS trustees to follow suit.

Prospect national secretary Noel McClean welcomed the High Court ruling. He said: “This was about protecting the pension increases that Section B members are entitled to and not, as BT argued, a windfall gain. We welcome this judgment, which is fair and right.”

BT said that as a result of the ruling “the Trustee will continue to pay pension increases for those Section B members in line with legislative increase requirements for public sector workers as set out in the rules of that Section”.

However, the company did not rule out seeking permission to appeal the decision.

Noel McClean added: “We await next steps from BT, but for now at least, we are glad that the affected members will continue to have their pension entitlements protected.”

The BTPS was closed for future accrual from 1 June 2018.