BT Pension Scheme

robin61

Ive just seen this article about the BT Pension Scheme

http://www.telegraph.co.uk/business/2017/05/27/bt-cap-pension-pots-fill-14bn-hole/

Very early days of course if changes are made these things tend to take a year or two to sort out.

I was hoping to retire early from BT in 2018 aged 57. The plan is to defer my pension to age 60 to avoid the actuarial reduction. I was wondering if there is much that could be done to reduce benefits for deferred pensioners. Does anyone know of any examples where this has happened to deferred pensioners of other schemes ? If there is a risk it might be worth considering taking the pension early ?

xylophone

If BT were to close the DB Scheme tomorrow, all the existing employees would become deferred pensioners of the closed scheme and entitled as here.

https://www.btpensions.net/

robin61

xylophone wrote: »

If BT were to close the DB Scheme tomorrow, all the existing employees would become deferred pensioners of the closed scheme and entitled as here.

https://www.btpensions.net/

I know there are risks for active members. We saw that in 2009 when the company made various changes.

I guess what I'm trying to understand is if there are any risks that that the benefits already accrued can be watered down for deferred members. I've always assumed not but I'm wondering if there are any examples where this has happened other than in the event of the company going bust.

madeinireland_2

I believe they cannot change existing accrued benefits as that is covered by legislation.

What I do wonder is...

If they close the scheme do the schemes redundancy terms still hold true or would BT then be able to get rid of people with a minimum statutory payment instead of the more attractive terms they offer on a voluntary basis? - i.e. Is this a first step on the road to getting rid of people cheaply.

robin61

Hi Made in Ireland.
Yep since I posted I notice Connect have sent an EMail saying that existing benefits already accrued are protected by pension legislation. So at least that is positive.

I think I remember seeing something back in 2008 laying out the early retirement through compulsory redundancy options. They were pretty generous. Much more so than the voluntary early leaver schemes. Hence there haven't been compulsory redundancies so far.

I saw something from the CWU saying BT had given them 12 months notice required to renegotiate the 2008 agreement. I can't help thinking it doesn't look good. In 2009 they switched us to CARE, increased the NRA, increased employee contribution and they already have us on CPI instead of RPI. I'm thinking there are only 2 options left either a big increase in employee contributions or close the scheme.

I'm pleased I got a healthy wedge into the AVC. I would not be surprised if you can't pay into the AVC anymore if the scheme closes. I'm thinking it might be a good idea for those who haven't done so yet to take advantage while they still can.

Hopefully there will be an early leaver scheme early next year. If there is I'm off like a shot. Could've probably gone in April but decided it was a year too early. Hope I don't regret it !

tigerspill

I cant see them changing AVCs as this doesn't cost the company or pension fund anything. It is the tax man helps out here.

And good news that existing accrued benefits are fully protected. Does anyone know if this is "cast iron"? I guess there is also the PPF. And then the Crown Guarantee.


So hopefully all will be OK.

madeinireland_2

Existing accured fund is protected. They can really only stop future accurals by closing the scheme which is what I suspect they will do.

Actually because I have already accured what I think I need, I believe a move to close the scheme would be good for me as with a deferred scheme I would get increases of CPI rather the 0% I would get with a pay rise.

The only thing I am concerned about is leaving ourselves open to a situation where they can get us to go with a very small severance payment where the pension scheme actually protected us from that - hopefully that protection would remain as we would still be members of the scheme even though it is closed to new accurals.

I would have gone tomorrow if they had opened the scheme up in my area but unfortunately they didn't and I did ask if I could be included in the scheme but was told no - even though at the time I had done absolutely nothing for 4 weeks. How silly is that?

What part of the business are you from Robin? I hear there are more schemes coming with better terms but only in certain areas.

madeinireland_2

Robin - I have sent you a PM.

robin61

Thanks. Yes got it.

robin61

tigerspill wrote: »

I cant see them changing AVCs as this doesn't cost the company or pension fund anything. It is the tax man helps out here.

And good news that existing accrued benefits are fully protected. Does anyone know if this is "cast iron"? I guess there is also the PPF. And then the Crown Guarantee.


So hopefully all will be OK.

Maybe it's my cynical nature but I get the impression that BT like people to take the larger lump sum and sacrifice pension to get that. It gets some of their future liabilities out of the way now.
Of course if people have built up an AVC they use that to increase the lump sum instead of reducing their annual pension.
As the AVC is a DC scheme linked to the DB scheme if the DB scheme closes I would not be at all surprised if it's also no longer possible to fund the AVC.
I could be wrong of course. But if I didn't have enough in my AVC I'd be looking to make the most of it now.

tigerspill

robin61 wrote: »

Maybe it's my cynical nature but I get the impression that BT like people to take the larger lump sum and sacrifice pension to get that. It gets some of their future liabilities out of the way now.
Of course if people have built up an AVC they use that to increase the lump sum instead of reducing their annual pension.
As the AVC is a DC scheme linked to the DB scheme if the DB scheme closes I would not be at all surprised if it's also no longer possible to fund the AVC.
I could be wrong of course. But if I didn't have enough in my AVC I'd be looking to make the most of it now.

I do agree on maxing AVCs. I have been doing this for a few years now thankfully