BT Pension Scheme Section C - Off Set

gallifreyan1969

Hello,

After 27 years with BT I have just left and will be taking my BTPS shortly. As part of the paperwork to take the BTPS it states that at the age of 67 (state retirement age) my BTPS will reduce by £1,349 pa due to something called the State Pension Offset. I certainly dont remember agreeing to this? Is there anything I can claim at the age of 67 that will compensate for this loss (pension credit for example?)

Any advice and insight would be grateful.

Kind Regards,

[Text removed by Forum Team]

QrizB

Welcome to the forum.

As part of the paperwork to take the BTPS it states that at the age of 67 (state retirement age) my BTPS will reduce by £1,349 pa due to something called the State Pension Offset. I certainly dont remember agreeing to this?

There are a number of employers' pension schemes where your pension prior to state pension age is increased, then dropping back when your SP comes into payment. This is a feature of the scheme and should have been detailed in the information you were given when you joined.

See also this thread:

https://forums.moneysavingexpert.com/discussion/6312865/btps-state-pension-offset

Is there anything I can claim at the age of 67 that will compensate for this loss

You can claim your state pension.

(pension credit for example?)

The qualifying criteria for pension credit are published here. Do you expect to be eligible? It would be unusual for someone with an employer's pension to have a low enough income to receive PC, but it's not impossible.

snowlaser

It was a not uncommon feature of many DB schemes "back in the day" to provide a higher level of pension before State Pension Age to 'tide you over' with the understanding that it drops at SPA because now you're getting your State Pension.

In some cases it doesn't happen by default, but you can ask to have more before SPA and less after. In other cases (sounds like BT is one) it happens automatically.

molerat

You won't have "agreed to it", it is part of the scheme rules, the reasoning for it is clearly explained in the scheme booklet and is to do with the scheme reverting back to a contracted in basis in 2009. There is be nothing you can claim or do about it.

https://www.btps.co.uk/MediaArchive/SchemeSite/BTPS_Member_Booklet_Section_C.pdf

See P11

retiringin26

https://forums.moneysavingexpert.com/discussion/6686061/bt-pension-scheme-section-c-off-set

This is due to you being "contracted out" of the S2P until April 2009.

Exodi

tburchell69

As part of the paperwork to take the BTPS it states that at the age of 67 (state retirement age) my BTPS will reduce by £1,349 pa due to something called the State Pension Offset. I certainly dont remember agreeing to this?

But obviously if there were no offset the amount you would receive before SPA would be reduced? You can surely appreciate you can't have your cake and eat it.

Personally, I think it is a much better dynamic. It is a frustration of pension planning with DB schemes the situation where a retiree goes from a low income baseline before SPA to suddenly having more money than they know what to do with when they reach SPA. Surely you'd want more money when you're younger and will enjoy it most?

tburchell69

Is there anything I can claim at the age of 67 that will compensate for this loss

… the state pension?

I'm surprised to hear you have a DB pension with BT after working there for 27 years and you think you'll be entitled to pension credit?

poseidon1

I am familiar with Tesco's version of the state pension offset enhancement.

In their case and for a few favoured members who joined their first scheme many years ago, the retirement age was 60. For those that took their pension at that age it paid an additional bridging amount equivalent to the state pension for 5 years until age 65, when the enhancement would fall away and the normal state pension takes its place. It was available only to members at managerial level or above.

It was an incredibly generous option in the first iteration of Tesco's DB scheme and did not last long once the company realised just how much it would cost them to maintain.

As a result just a few individuals ever benefited, some of whom did not even understand they had it until it terminated at their state pension vesting age and they queried the pension administrators why their pensions had inexplicably reduced!

For me this was a prime example of the lack of engagement in pension matters that beset large swathes of the population at all levels including upper management, since the annual pension information statement clearly mentioned this entitlement, whilst in the course of payment it was shown separately on their year end payment summaries.

In the OP's case I am utterly bewildered at his comment related to 'pension credit' ever being a possibilty for him, bearing in mind entitlement to 27 years of accrued BT DB pension. Yet another unfortunate example of lack of engagement.

xylophone

Have you obtained a state pension forecast?

tigerspill

Yes, this is the way the BTPS works and is part of the scheme operation.

If you login to the BTPS website the documents explain this and they now publish the value each year (the deduction goes up with inflation each year). I used to have to write to them each year to get the updated value - but much easisr now.

chapea

it’s also the same with DB pensions from HSBC I didn’t know about it either though joined the scheme at 18 and was Midland Bank then and I presume must have been in the paperwork somewhere

I retired early on ill health in my early 50’s and it wasn’t mentioned then in all my pension paperwork

I saw a few years later in a newspaper article where it was being brought up at their AGM where a group were trying to get this ‘clawback’ stopped. I rang the pension administrators I believe tower Watson and they came back apologising that although it wasn’t in my paperwork when I retired I would be hit with this and they sent out a letter stating I would receive £1500pa less when I hit state pension age.