BT Pension S2P offset

RickyB2000

As I understand, it was a requirement for opted out pensions schemes to ensure you were not worse off from opting out (from the gov.uk website):

"The extra pension you get from a contracted-out pension scheme is usually the same as, or more than, the Additional State Pension you would have got if you didn’t contract out."

Your salary didn't increase, but I believe that the benefit you will receive will include an extra bit to reflect the opted out benefit. It is probably not called out specifically, it is probably just built into the final salary calculation

madeinireland_2

Hmmm I'm not convinced especially as I can calculate my current pension precisely based on my salary so I can't see how any extra can be hidden. I'm quite prepared to believe that the BT pension scheme benefitted but I'm not sure it translated into a direct benefit to individuals within the scheme - so I think (with the greatest respect) that your analysis is perhaps flawed. Also maybe the benefit to me as an individual was that I didn't have to pay as much NI perhaps when I was contracted out rather than a benefit to the pension? - so in summary I'm not convinced that your argument is correct.

xylophone

So I presume I lose that off my BT pension at state pension age? So that is about £15 per week.

It seems to me that BTPS is saying that until you draw the state pension, the Scheme is in effect paying you the S2P you have earned in the state scheme - when the state pension comes into payment, the S2P will be within the state pension so that to avoid double provision, BTPS will deduct the equivalent of S2P?

You could ring ( or better write) to Accenture to ask for a full explanation?

Do come and tell us what it is!

RickyB2000

But what is the calculation? Something like Salary X 1/80? Why not 1/79 or 1/60? To a certain extent this is an arbitrary number. Of course it won't be, there will be a much more complicated calculation underlying the this ( to ensure the scheme doesn't go bust......) and part of that will include factoring in the extra NI contributions that I'll be paid to the scheme when opted out.

I agree, it appears BT is paying you the element of S2P up to state pension age (for the contracted in part) and then flipping this over to the state pension. Not sure why they are doing this, rather than just reducing the scheme benefits to reflect the reduced NI contributions to the scheme - maybe they had limited room to manoeuvre when introducing the new pension (contractually or with the unions), or could make it look better than it was. However, it is a benefit to anyone who wants to retire early as you do get this extra cash, though may be misleading if not called out that this would happen as the CARE pension is not worth as much as the headline figure.

I look forward to hearing what the scheme says on this matter!

madeinireland_2

RickyB2000 wrote: »

But what is the calculation? Something like Salary X 1/80? Why not 1/79 or 1/60? To a certain extent this is an arbitrary number. Of course it won't be, there will be a much more complicated calculation underlying the this ( to ensure the scheme doesn't go bust......) and part of that will include factoring in the extra NI contributions that I'll be paid to the scheme when opted out.

I agree, it appears BT is paying you the element of S2P up to state pension age (for the contracted in part) and then flipping this over to the state pension. Not sure why they are doing this, rather than just reducing the scheme benefits to reflect the reduced NI contributions to the scheme - maybe they had limited room to manoeuvre when introducing the new pension (contractually or with the unions), or could make it look better than it was. However, it is a benefit to anyone who wants to retire early as you do get this extra cash, though may be misleading if not called out that this would happen as the CARE pension is not worth as much as the headline figure.

I look forward to hearing what the scheme says on this matter!

You guys must be kidding - a clear answer out of Accenture - I don't think I've ever I had one of those.