BT Pension Index Linking

Andy_L

919er wrote: »

Well Steve Webb (Lib Dem Pensions Minister) has been lying on TV then because he said just what I said, It's enabling companies to do it but they don't actually have to.

No he isn't.

The previous legislation obliged schemes to provide indexation at RPI, with a cap of 2.5%, 5% or unlimited (depending on the date of service). The changes to the act allows (but not obliges) them to use CPI instead.

Most (private sector) scheme rules state RPI (with caps) rather than refering directly to the act. In which case to change the rules requires consultation with employees & trustees tand can only apply to future service.

Unfortunatly the BT scheme (as an ex-public sector scheme) links itself directly to the acts & thus automatically changes as they do. AIUI the legal challenges by the various Unions hinge on RPI indexation being an accured right & thus protected by other legislation (and the embarassment factor of the PMs pre-election statment that indexation was an untouchable accrued right) & thus this change can only apply to future service

Just_landed

As a consequence we should all cancel our Broadband and Telephone services and go with another supplier - 200,000 or so cancelations would cost them a lot of revenue - we'll act with indecent haste like they have done.

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Unless you get a discount off BT I recommend you move away I did and I save upto £60 a month. When the competition came knocking at my door I sent them away believing the prices he quoted was a wind up, 6 months later another man from the same company came a knocking saying the same thing i thought there must be something to this, signed up never looked back even today BT cannot compete, i do keep an eye on them though.

:cool::j:j:j:cool:

919er

Andy_L wrote: »

...... The changes to the act allows (but not obliges) them to use CPI instead.

So am I right, they don't actually HAVE to change to CPI?

..... (and the embarassment factor of the PMs pre-election statment that indexation was an untouchable accrued right) & thus this change can only apply to future service

The change is happening for Pensions in payment isn't it, not just future service?

Are the unions making a legal challenge then, I haven't seen anything?

mjm3346

The change is happening for Pensions in payment isn't it, not just future service?

It is still indexation, it is the index used that has changed. It is not retrospective as indexation "earned" to date will stll be RPI and in future it will be CPI (someone who left 10 years ago and has a preserved pension will keep the rpi increases to date and future increases will be cpi).

Andy_L

919er wrote: »

So am I right, they don't actually HAVE to change to CPI?

No, read the 3rd paragraph of my post you quote. The BT pension scheme has to change to CPI because that is what the scheme rules oblige them to do.

919er wrote: »

The change is happening for Pensions in payment isn't it, not just future service?

Its happeng for pensions in payment, past service & future service.

Andy_L

mjm3346 wrote: »

It is still indexation, it is the index used that has changed. It is not retrospective as indexation "earned" to date will stll be RPI and in future it will be CPI (someone who left 10 years ago and has a preserved pension will keep the rpi increases to date and future increases will be cpi).

No, for schemes that explicitly mention the various acts in their rules the indexation change applies to past service & pensions in payment as well as future service.

mjm3346

Andy_L wrote: »

No, for schemes that explicitly mention the various acts in their rules the indexation change applies to past service & pensions in payment as well as future service.

If a pension is in payment (or there is a preserved one) and for example it has risen from 10k to 12k with RPI increases, it will increase by CPI from now on, there will be no going back to 10k and working out what it would be with CPI increases.
All future increases will be CPI, pension in payment or not.

919er

Andy_L wrote: »

No, for schemes that explicitly mention the various acts in their rules the indexation change applies to past service & pensions in payment as well as future service.

Err - Your worrying me now. Your surely not saying that the CPI index will be retrospective and that pensions in payment will be re-calculated to apply CPI for past years rises ???

Andy_L

Sorry, that was poorly worded

A pension in payment will be what it is and have future increases at CPI

Pensions not yet in payment will, when finally paid, have all increases at CPI (although their's a gray area with defered pensions - it depends when indexation occurs, either annually until retirement age or only in one big lump when you retire)

When i say past service will be changed to CPI I mean that, instead of as happened with increases to retirement age, someone ends up with pension acrued before the changeover date having RPI indexation and that acrued after the change having CPI indexation they end up with all their pension having CPI indexation

Razorbill_2

As a matter of interest........

Those recently retiring from BT have been given the option of taking the non-GMP part of their pension as a level "non-increasing" amount. I assume that, for future retirees, the level amount offered will be less, due to the reduced indexation throughout the expected life of the pension.

For those who are currently receiving this level amount, do you think BT will reduce the amount payable or are they prevented from doing so?