PensionsNov 15 2017

BT pension changes branded 'slap in the face'

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by
BT pension changes branded 'slap in the face'

BT is planning to close its defined benefit (DB) pension scheme to managers and offer lower contributions for front-line staff as part of changes which have been branded “a slap in the face” by union leaders.

According to FTAdviser sister newspaper the Financial Times, BT sent a document yesterday (14 November) to members of the group’s pension scheme, unions and pension trustees, kicking off a 60-day consultation period on these changes.

The Communication Workers Union, which represents some of the 21,000 non-managerial staff, is urging its members to say no to all changes being proposed by the telecom company.

BT manages two pension schemes: the British Telecom Pension Scheme (BTPS), its DB plan with more than 300,000 members and assets of more than £40bn, and the British Telecom Retirement Saving Scheme (BTRSS), its defined contribution (DC) pension that has been in place since 2001.

Although the BTPS has been closed to new entrants in 2001, existing members continue to build up benefits and by some measures it is the largest private sector pension scheme in the UK.

The scheme’s triennial valuation is due later this year which is expected to show that the BTPS deficit will to grow to £13.9bn up from around £10bn in 2015.

BT is proposing that front-line workers’ contributions are increased by up to 3 per cent of salary and to remove the current national insurance rebate, which would cost members another 1 per cent of salary, the CWU said.

Andy Kerr, the CWU’s deputy general secretary, said BT was hoping that faced with the option of closure, members will accept these "radical changes" and embrace "significant cuts" in their future pension.

He said: “At the same time, BT’s estimated level of contributions for future service from 1 April 2018 would only marginally increase. There is no way this is acceptable or fair.”

This proposal is an effort to encourage staff to switch to the DC scheme, which is less generous and riskier for employees but more affordable for the company.

If an agreement cannot be reached between the company and its non-managerial staff BT will close the DB scheme to future accrual, which was an option suggested in May.

Mr Kerr said: “BT’s current proposals for both the BTPS and BTRSS are nothing less than a slap in the face for loyal employees and must be challenged with a totally united front.

“While the CWU accepts that there is a case for some change with regards to DB pensions – and the union is utterly committed to reaching a negotiated settlement that addresses the challenge of rising costs to the company, particularly with regards to future service accrual, - we won’t be fobbed off by proposals which represent the short-changing of ALL of our members.”

The employee consultation will run to 17 January 2018, with the proposed changes to take place from next April.

maria.espadinha@ft.com