BT Pension Index Linking

de1amo

i left BT because it was a lousy company run by faceless city types who were more concerned about shareholder value!--i was pensoned off at 37 because it was a cheap option! when i joined it was the post office and i was 'forced' into the pension scheme which you joined with the distant promise that you got a pension connected to the inflation rate--this promise has been renegade on and i just see this as another cynical way of making the working class and pensioners paying for the bankers and major shareholdings!--i dont know what your beef is--we are all being screwed over and will be getting our state pension in a very dim future--for me about 70 i reckon!

Ripoff_2

JohnB47 wrote: »

I left in 1998 and started drawing my BT pension in 2001. I have had a letter from the Trustees.

All who have replied, thank you.

I believe there is a real issue here because prior to 1st April 2009 the rules of the pension scheme 10.2 for indexing seem to apply but after 1st April 2009 the rules were being changed to accommodate additional benefits for members negociated during the pension review of 2008 which was agreed and implimented in 2009 as voted on by the members.

One of the offsets for increase retirement age from 60 to 65, the increase in payments to 8.5% and the change from a final salary to a Career Average scheme was that section B members were able to choose Guaranteed indexing based on RPI.

This is clearly stated in the pension review document and it is also clearly stated that the rules of the pension scheme would be amended to accommodate these additional benefits and as this was a legally binding contract between BT, the Unions, the members, the employees and the Trustees then to move to CPI indexing by the Trustees will be a breach of contract for anyone after 1st April 2009 who is a section B member. Hence, why I believe no one who left after 1st April 2009 has yet had a letter from the Trustees.

In effect there is a two tier pension scheme running in BT for section A/B members, pre 1st April 2009 and after 1st April 2009.

The Government has already said that the CPI change is the statutory minimum and pension schemes can index more than this if they wish, so RPI can be given to section B members from 1st April 2009 without reference to the change.

Pre that date gets more complicated but if BT/Trustees wanted to give increases greater than the CPI stat min then they can, there is no law preventing them from doing so for ALL members.

The announcement by Steve Webb on the 8th December that private pension schemes would not be forced by legislation to move to CPI because basically there would be more law suits flying around than the Government could cope with changed the stance on the people after 1st April 2009 in the BT scheme. I may be wrong but I think this is what the position is.

This is my take on all this and I would welcome any comments as to others opinions.

MEY_3

An interesting post "Ripoff". My concern at present is what action the CWU, NFOP and allied organisations may take, if any. Each party may have a different view on what action they need to take for their members. Though the human rights and "acquired rights" angles may be the most popular my own feeling is the most culpable party, I am sad to say, is the trustees. I'm not sure that pursuing them will be ultimately advantageous or successful in the long run (even if possible) but I cannot see how they could have failed to communicate the most basic of facts regarding the terms of index linking for so many years. Not only this but they have consistently misrepresented the true position, and in doing so have given members no grounds to query this aspect. This behaviour is at best negiligent. Of course, the actual trustees have changed over the years too, so how is it possible to hold them to account? At present I am trying to ascertain what action (or not) may be taken against them and have been referred to the Pension Advisory Service by the CAB. I remain unconvinced that PAS are qualified to comment on this (as more of a legal issue I would think) but I must await their response before taking further steps.

Apropos your remarks above, if it can be demonstrated that the post 1 Apr 2009 position is specifically linked to RPI it suggests that all parties believed that the previous pension rules were linked to RPI too. This means that not only did the CWU believe this to be the case, but also BT and the trustees, suggesting that morally, if not legally, they should accept the arguments that A/B Section pension members now put to them about the change being "unfair". Your analysis also means, of course, by extrapolation that current employees now affected by the post April pension rules should be entitled to RPI even though many contributions were made under previous arrangements.
I think the one thing on which we may all concur is that, as predicted, the change from RPI to CPI is far messier and contentious than BT, the government and the trustrees ever realised.

Haybob

Please find CWUs latest information regarding CPI pension change:

No: 1126/2010
Ref : AK/NC/SD
Date: 17th December 2010

To: All Branches with Members in BT

Dear Colleague,

BT PENSION SCHEME INDEXATION

In LTB 967/2010 we informed Branches that, following a Government announcement that the Consumer Prices Index (CPI) would be used as their measure for inflation, BT had announced that this would have a direct impact on the indexation arrangements for some parts of the BT Pension Scheme (BTPS). From now on Section A and B pensions in payment and deferred pensions, as well Section C deferred pensions, would increase in line with the CPI rather than the Retail Prices Index (RPI). This is highly likely to be detrimental to BTPS members as the CPI consistently results in a lower rate of inflation than the RPI.

At that time the position in relation to Section C pensions in payment was not clear. The rules relating to increases in Section C pensions in payment are complex, but they do refer explicitly to the Retail Prices Index. BT and the BTPS Trustee were taking independent legal advice on this issue.

Since the announcement the Union has met with BT to express our strong opposition to the Company announcement and to seek clarity on Section C. We argued that there should be some amelioration of the impact of the change as it affects Section A/B pensions. After all, less than two years ago members agreed in a ballot to major changes to the BTPS which mean that members now pay more for a lower level of future pension. It is not fair now to have a further detrimental change forced onto scheme members by the Government without some compensatory improvements elsewhere. We will continue to make this case to BT and we are also taking further legal advice on the whole issue.

At the meeting BT did confirm that BTPS Section C pensions in payment will continue to be increased in line with RPI, capped at a maximum increase of 5%. In other words, the way these Section C pensions will be increased in future will not change.

Last week the Government also announced that it does not currently intend to introduce a legislative override to force all pension schemes to use CPI in place of RPI.

This announcement has understandably caused some confusion. Members have approached the Union to ask if this means that the original BT decision to switch from RPI to CPI would now be rescinded. Unfortunately, this is not the case. All the Government has said that it would not force schemes in the private sector which have rules explicitly referring to RPI indexation to switch to CPI indexation. The BTPS Section A and B rules and Section C deferred pension rules do not refer explicitly to RPI. The rules refer instead to the Pensions (Increases) Act. It is the way the Government will operate this Act in future, by using CPI instead of RPI, which affects the BTPS. So, the Government statement changes nothing in relation to the original BT announcement.

However, the Government statement however does have a bearing on Section C pensions in payment. The rules here do refer explicitly to RPI. Had the Government's announcement gone the other way, then Section C pensions in payment could have been affected. CPI could have become the index to be used for determining increases for this section as well as for the rest of the BTPS.

However, the Government is a conducting consultation on this issue - so while for now RPI will continue to be the index used for Section C pension increases, it is possible that the Government will change its mind following its consultations. We do know, for instance, that the CBI has argued in the past in favour of a legislative override. The Union will be responding to this consultation, arguing against a legislative override.

Yours sincerely,

Nigel Cotgrove
Assistant Secretary

JohnB47

".....but if BT/Trustees wanted to give increases greater than the CPI stat min then they can, there is no law preventing them from doing so for ALL members."

Ripoff, this has been my point all along but BT, the Trustees and others here seem to be saying that 'the scheme rules' state that BT must adopt CPI (as it did RPI) as the absolute uprating value, rather than as a minimum (which is what the government says it is).

It seems to me that BT is simply wanting to adopt CPI and is trying to ignore the fact that it is a minimum.

Now if employees retiring after 2009 get RPI and those before get CPI, that would be outrageous.

Ripoff_2

I have a letter from Steve Webb directly written to me personally that says, and I quote "It is important to stress that the change for occupational pensions only affects the requirement for statutory minimum increases so schemes may continue to make more generous increases if they wish. The statutory requirement to increase pensions in payment only applies to pensions earned from April 1997, but many schemes also provide increases for pensions earned before then"

Now then, BT and the Trustees according to the Minister can increase pensions greater than CPI if they so wish, irrespective of any rules but after the 1st April 2009 they agreed in a formal contract to increase by a guaranteed index based on RPI due to the change in the actual pension after that date.

JohnB47

Ripoff wrote: »

I have a letter from Steve Webb directly written to me personally that says, and I quote "It is important to stress that the change for occupational pensions only affects the requirement for statutory minimum increases so schemes may continue to make more generous increases if they wish. The statutory requirement to increase pensions in payment only applies to pensions earned from April 1997, but many schemes also provide increases for pensions earned before then"

Now then, BT and the Trustees according to the Minister can increase pensions greater than CPI if they so wish, irrespective of any rules but after the 1st April 2009 they agreed in a formal contract to increase by a guaranteed index based on RPI due to the change in the actual pension after that date.

So why, I wonder, is this point not even aired in the unions letter quoted by Haybob:

"The rules refer instead to the Pensions (Increases) Act. It is the way the Government will operate this Act in future, by using CPI instead of RPI, which affects the BTPS."

A question - has anyone actually read this act and can they quote here please what it says about RPI (and will say about CPI)? If it says something like "pensions in service and accrued will increase each year by the September RPI measure, as a minimum" then surely BT cannot simply say that they must apply RPI (and soon CPI) and they are not allowed to apply any more.

Otherwise, what are we to make of Steve Webbs words? Then again, legal views have been sought, so perhaps I'm just plain wrong here. It's just that BT seems to be saying that it's all the governments fault and the government are saying, not us, BT can pay more if they want to.

How do we resolve this confusion? A letter direct to Steve Webb? Anyone got his address, or do I go via my MP (who hasn't replied to my EMail to him about the Early Day Motion)?

hugheskevi

A question - has anyone actually read this act and can they quote here please what it says about RPI (and will say about CPI)?

This legislation simply sets out the statutory minimum revaluation and indexation schemes must apply. This was RPI capped at 2.5% before the change to CPI, and from now on it will be CPI capped at 2.5%.

If it says something like "pensions in service and accrued will increase each year by the September RPI measure, as a minimum" then surely BT cannot simply say that they must apply RPI (and soon CPI) and they are not allowed to apply any more.

The legislation simply sets out the minimum schemes must do. As long as revaluation and indexation meets this requirement, schemes are free to do whatever they want to (subject to complying with scheme rules) - so if they wanted to uprate by 2.5% regardless of what inflation happened to be that would be satisfy the legislation.

Again, there are two piecies of legislation here:

1) The change to the uprating of Additional State Pension, which applies to public sector pension schemes. This has changed from increasing by RPI to increasing by CPI. Consequentially, public sector pension indexation has changed to CPI.

As schemes such as BT reference this piece of legislation, they have also consequentially changed to being based on CPI.

2) Statutory Minimum revaluation and indexation - sets out the minimum by which pensions must be revalued and indexed, changing from RPI capped at 2.5% to CPI capped at 2.5%.

This legislation is absolutely irrelevant to BT - their indexation arrangements more than satisfied the statutory minimum before and after the change.

The whole problem is that the BT scheme rules directly link to the first piece of legislation.

How do we resolve this confusion? A letter direct to Steve Webb? Anyone got his address, or do I go via my MP (who hasn't replied to my EMail to him about the Early Day Motion)?

That is akin to writing to the Bank of England to query why your mortgage which tracks the base rate has increased when base rates increased. It isn't anything to do with the Bank of England, whose only concern is the setting of interest rates.

Similarly the Government simply sets out the Pension Increase act and statutory minimums. That schemes have chosen to link themselves in their rules to these things is an issue for schemes, members, unions and doubtless lawyers to resolve themselves.

Haybob

As I have indicated on a related post, the only way this is going to be prevented, since the change has not taken effect yet, is all affected to unite and take the protest on the streets (so to speak), or find some legal redress due to break of contract when people signed to accept voluntary redundancy under a contract that their pensions were to be index linked to RPI.

wanabe_2

As a result of being fired up by this forum and the EDM forum, I have actually taken some action Emailing my MP(Tory). I've tried to make the point for some sort of miss selling. Back in 1997 when I took the package there wasn't a CPI- I think, so all my once in a lifetime decisions were based upon RPI as that's what every piece of written information referred to.

I notice that there isn't too much outcry regarding this maybe because we pensioners are lumped in with the Feathered bedded public servants- Somehow that needs to be cleaned up. Another tiny point. Employers read these forums too, well the technology does, collecting all the relevant details to tackle issue by issue. Just a thought. Regards