back to article BT pension scheme will stay on RPI interest rates for now

BT has lost its legal bid to cut its £14bn pension deficit by slashing interest rates for 83,000 members of its post-privatisation pension scheme. This morning the Court of Appeal in London threw out BT's bid to change the interest rate payable on its pensions, after the High Court had already said "no" earlier this year. The …

  1. julian_n

    Section B ended 31st March 1986 - post privatisation.

    1. Anonymous Coward
      Anonymous Coward

      Entry to section B ended, but existing members who joined before 1986 remain in Section B unless they choose to change to Section C terms.

  2. Anonymous Coward
    Anonymous Coward

    Oh well.

    I suppose this means that Openreach will have no choice but to keep sweating the copper assets, and avoid any pro-active investments in FTTP.

    I'm not for or against the company or the pensioners in this matter - the company made promises and has to stick by them, the employees on the other hand are enjoying a state-guaranteed pension scheme that indexes by the most generous measure available. If BT go bust and government bail out the pension fund, we pay through taxes. As long as BT don't go bust they have to recover the pension deficit repair costs to customer's bills.

    1. Robert Carnegie Silver badge

      Re: Oh well.

      If you're referring to the "Pension Protection Fund", I think that's paid for by taxing other pension funds. Which means basically that pensioners and pension fund members are paying for it. Now, ideally that's everybody.

      1. Warm Braw

        Re: Oh well.

        ideally that's everybody

        It's funded by a levy on other defined-benefit schemes, which are offered to almost nobody going forward. Just as well life-expectancy is going down...

    2. This post has been deleted by its author

    3. Anonymous Coward
      Anonymous Coward

      Re: Oh well.

      "the employees on the other hand are enjoying a state-guaranteed pension scheme that indexes by the most generous measure available."

      To be honest, they're probably paying for it. I'm not familiar with the BT scheme, but the staff payments into all the DB scheme I know of are ... high.

      "If BT go bust and government bail out the pension fund, we pay through taxes."

      Nope, it's funded by a levy against other pension funds, as well as the assets of funds in the PPF (hint - some of them are actually making a profit and being used to fund other funds in the fund).

      "As long as BT don't go bust they have to recover the pension deficit repair costs to customer's bills."

      Do we know if it's an actual deficit, or an accounting deficit? I know at least one DB fund has a "large deficit" due to the accounting measures used only (in reality it has more than enough money).

  3. Anonymous Coward
    Anonymous Coward

    Reflections on my pension

    I've been with BT since the late '80s, in section C, the third & last of the final salary schemes. This was closed to new joiners in 2001, IIRC, & I appreciate I'm fortunate. Our 'final salary' was switched to 'career average' in 2009 (i.e. career average of the post-2009 salary, which, given the lack of pay rises for those such as myself who have made a career striving for mediocrity, is probably only a bit more crap than final salary. But it's still worse than what we were promised: the reward for lower pay was a good pension, we were told in the '80s.

    Then in 2018, they closed my career average scheme too, with benefits-accrued being preserved, & we were moved onto defined contribution instead, with some additional top-ups for a few years by BT. So we're now on the same system as most private sector people, and all BT management grades since 2001. I can't really complain because I'll still have a better pension than those unlucky enough to be younger than me. Makes one appreciate how fortunate those who retired in the early '90s actually were.

    1. Pascal Monett Silver badge

      Re: Reflections on my pension

      "what we were promised: the reward for lower pay was a good pension"

      And now BT is trying to screw you over on that promise. That is a clear indication of how long-term promises need to be backed by an actual, legal and binding contract that clearly states what is supposed to happen.

      BT can try pulling this scheme off (although it is being thwarted, thankfully) because individuals have no piece of paper with BTs obligations on it - they just have a recorded history of being on a given pension fund for a given amount of time. That offers them no control and no recourse.

      If the legal beagles weren't doing their job, BT would be screwing many people over and some manager would be getting a fat bonus.

    2. Wandering Reader

      Re: Reflections on my pension

      (You're me, you are)

      We're fortunate, but not as fortunate as our partners. Being in 2 schemes the "death in service" payout for partners is 50% of our DB pension from Section C, plus 10*salary lump sum from the defined contributions scheme.

      Ever since my wife found out she has been encouraging me to give up gentle exercise and take up extreme sports. The sooner I retire the safer I will be.

  4. Roland6 Silver badge

    Will Ofcom follow Ofwat and give the Pensions Ombusman a kicking?

    Ofwat has done what the Pensions Ombusman has failed to do and linked pension scheme deficit reduction to investment and dividends; albeit in a tentative way. So as to improve the level of pension funding before a business enters the critical "unable to fund anything due to monies being extracted by

    'investors' " - the Pensions Ombusman has a track record in turning up late resulting in everyone getting an excessively large haircut, that could have been avoided if they had acted years earlier.

    Perhaps Ofcom needs to do similar, but be bolder, and directly link pension deficit reduction to dividends (eg. pension deficit contribution must be equivalent to at least 50% of gross annual dividend). Also linking wholesale price increases to pension deficit reduction.

  5. John Brown (no body) Silver badge
    Coat

    I came here...

    ..expecting a story about how BT manage their pension scheme on a Raspberry Pi.

    1. Doctor Syntax Silver badge

      Re: I came here...

      "how BT manage their pension scheme on a Raspberry Pi."

      It's managed by Accenture. Is that better or worse?

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