Capital Branch

Branch Office: Room 1011, Baynard Hse, 135 Queen Victoria St, London, EC4V 4AA

Tel: 020 7236 5159




Wednesday - 4th May 2011

BT PENSIONS (/websites/LinuxPackage09/cw/uc/ap/

Change to the Pension scheme in 2009:

In 2008 the CWU entered into negotiations with BT around a move away from a final salary pension scheme.

The Company had argued for many years that the numbers feeding off the pension scheme was outweighing the funds going in, mainly due to the decreasing workforce. This was making the pension scheme unviable unless changes were made to how it was structured, then an option for them was to close the scheme.

The result of the negotiations saw the introduction of Career Average scheme (CARE) introduced in April 2009. This meant that all the years accredited under the final salary scheme were banked and from that time all new years would be subject to the new scheme.

This of course meant different things to different people, dependant on age, years of service and the scheme on which you were on.

By way of an example, someone aged 50 and had joined BT at 16 would see their pension maturing at around 61 years of age under the CARE scheme instead of 58 under the final salary scheme.

The other significant factor was the move away from retirement at 60, with an expectation of the Company that you should work until you are 65. However, within the law, you can choose to take your pension any time over the age of 55, but of course you would be subject to actuary reductions on your pension. At the current rate that would be 5% per year, so each year you would be short of your natural retirement age would see your pension reduced by 5%.

With all of this in mind, the CWU were able to negotiate and easement period. BT agreed that anyone that took their pension before 31st March 2012 could collect it under the old retirement age arrangements (although the scheme would be subject to the new CARE scheme since 2009). This would mean retirement at 60 is still an option, but still subject to actuary reductions on every year the individual is short of 60.

As an example, someone could leave before the 2012 date at 58 years old. However, although you would be almost paid up on your pension, you would be subject to 2 years worth of actuary reductions (at 5% per year).

In April 2012 the default retirement age then becomes 65.


BT’s change to the calculator:

In 2010 the government decided that they were going to calculate indexation using the Consumer price Index (CPI) instead of  the Retail Price Index (RPI) when it came to calculating tax credits and public services pensions from April 2011.

Although a private company, in November 2010 BT decided to adopt the same calculator when it comes to dealing with our pension scheme. This is obviously save them money and affect the amount going into our pension pot.


BT Pension Scheme – Commutation Factors:

Following the decision in November 2010 that the BT Pension Scheme (BTPS) was going to use the CPI instead of the RPI to increase certain benefits, it was announced that a review of actuarial factors including commutation and early retirement factors would take place and that new factors would apply from April 2011. These are the factors by which pensions are reduced if a member elects to choose tax free cash or commence payment of pension before the normal pension date. The factors are generally determined by the BTPS Trustee in consultation with BT. 

The CWU expected this review to be completed by the end of 2010 given the three months notice is necessary to activate pensions. However, the outcome of the review is still not known.

The CWU expected this review to be completed by the end of 2010 given the three months notice is necessary to activate pensions. However, the outcome of the review is still not known.

This has resulted in members are being asked to sign up for their pensions after 2nd April while being told the commutation factors may change, but without any indication of what the scale of the change might be. This is a highly unsatisfactory as it is not reasonable to expect members to take important financial decisions without proper information. The CWU has expressed our concerns over this situation to both BT and the BTPS Trustee.

BT has now confirmed that retirement quotes up to 30th June 2011 will be honoured using the existing factors. Until such time as the new factors are known all quotations for leaving after 1st July will only be estimates and this will be made clear on the on line pension modellers.

We continue to press both BT and the Trustee to resolve this uncertainty as soon as possible. Further details will be circulated once we have it.  

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