Active members of the former British Telecom (BT) defined benefit (DB) scheme have been asked to decide if they want to move to a new hybrid pension fund, due to launch in April 2019.
The British Telecom Pension Scheme (BTPS), a final salary scheme with more than 300,000 members and assets of more than £40bn, was closed to future accrual in June this year.
The new scheme, which will combine both DB elements and defined contribution (DC) pension benefits, will be available to about 19,000 team members in BT, Openreach and BT Fleet, the Communication Workers Union (CWU) said.
The company also sponsors the British Telecom Retirement Saving Scheme (BTRSS), a DC plan that has been in place since 2001.
As long as members are still working for one of the three participating companies in April next year, those individuals will have the option of switching to the new hybrid scheme.
Members of the hybrid pension fund will get guaranteed DB pension benefits on the first £17,500 of salary and DC benefits on the rest. The £17,500 threshold is pro-rated for part-timers and will generally increase in future by inflation, CWU explained.
By combining both types of pension benefit, the new pension fund is designed to reduce investment risk and also provide more certainty over pension benefits compared with other options, it added.
The telecoms company revealed these details yesterday (November 29).
Nigel Cotgrove, CWU’s assistant secretary, said it was important anyone eligible to join the new scheme "weighs up the alternatives before making an informed decision as to what is best for them.
"In the coming days, thousands of deferred members of the BTPS will receive a ‘Time to Choose’ booklet as well details of an online modeller that will allow them to compare the relative benefits of the BTHS and BTRSS in various different scenarios.
"It’s important to stress that the modeller cannot provide a guaranteed statement of pension benefits – so is not a substitute for independent financial advice – but it is a helpful tool that will hopefully assist members make an informed decision."
The union said it was legally prevented from giving financial advice but all its members were entitled to a no obligation initial financial consultation with Lighthouse Financial Advice.
Mr Cotgrove added: "While former BTPS contributors obviously have an important decision to make, the fact that the BT hybrid scheme formally launches on April 1 next year means there is time for individuals to weigh up the options in detail.
"For those who decide the BT hybrid scheme is right for them, there’s the option to pre-register for membership of that scheme from the start of March – guaranteeing hybrid scheme benefits from day one of the new scheme – but eligible members will still be able to opt in until the end of September next year."
A series of seminar, webinars and conference calls will also be made accessible to potential members over the coming months, CWU added.