Defined Benefit  

BT seeks to appeal pension rulings

BT seeks to appeal pension rulings

BT is seeking permission to appeal against two recent court rulings that prevented the company from changing the way it calculates pension payments for more than 80,000 of its defined benefit (DB) scheme members.

The announcement was made by the telecoms company in its third quarter trading update, which has led to criticism from union Prospect.

One ruling was made by the Court of Appeal in December, and relates to a request made by BT to switch from the using Retail Prices Index (RPI) to the Consumer Prices Index (CPI) when calculating annual pension increases for 80,000 members of Section C of the BT Pension Scheme (BTPS).

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CPI is generally lower than RPI, and the latter has not been considered a "national statistic" by the Office for National Statistics since 2013 because the formula used to calculate it did not meet international standards.

The case was taken to the High Court in December and concluded in January, when it was decided the scheme’s underlying index could not be changed.

The other ruling was made by the High Court in November and concerned how future payments would be calculated for 8,000 members of Section B of the BTPS.

BT had also started a legal process against HM Treasury in May after the Treasury announced in January that public sector pension schemes would pay the increases on guaranteed minimum pensions for people reaching state pension age before April 5, 2021 to protect them against inflation.

This solution, which is expected to cost the government £5bn, also affects the BTPS, since the pension fund still has links to the Civil Service Pension Scheme, dating back to before the FTSE 100 company was privatised in 1984.

Noel McClean, Prospect’s national secretary, said the union was "very disappointed that BT is still set on reducing its legacy pension obligations, despite the High Court and Court of Appeal already ruling against the company in two separate cases".

He said: "If the company succeeds in its new challenges, overall 88,000 members across the two sections of the BTPS could lose thousands of pounds each.

"Last year BT closed the BTPS for future accrual and transferred the remaining 11,000 managers in that scheme into the defined contribution BT Retirement Saving Scheme.

"These people – along with many others who have already retired – have been led to believe that rights accrued so far in the BTPS would be protected.

"But BT wants the courts to allow it to take away money that pension scheme members are entitled to and transfer it to shareholders. That’s unfair and two leading UK courts have already said so. We think BT should accept their rulings."

A BT spokesman said: "We can confirm that BT is seeking permission from the Court of Appeal to appeal the court order concerning BT’s claim for judicial review of the Treasury’s decision on public sector pension increases.  

"We are also seeking permission from the Supreme Court to appeal the Court of Appeal’s decision concerning the index for calculating pension increases for section C members of the BT Pension Scheme.