BT Pension options: opinions please

Options
1356

Comments

  • Simple_Soul
    Simple_Soul Posts: 48 Forumite
    Options
    Keep_pedalling wrote: »
    . Speaking of which, is your will up to date?

    Thanks for all your comments. I do not have a Will because I am happy with the Rules of Intestacy.

    When I die everything would go to my parents.
    If they are both dead, it would be divided equally between my surviving siblings.
    If they are all dead, it would be divided equally between their children (my nieces & nephews).
    That is all I would put in a Will anyway.

    I do not have any jewelry or anything expensive other than the house. My possessions are functional and mostly cheap and old.
  • Simple_Soul
    Simple_Soul Posts: 48 Forumite
    Options
    jamiex wrote: »
    Sorry, I've changed the option numbers around to illustrate my point:

    Options:
    1. £17,478 p.a. gross + £0 TFLS
    2. £15,816 p.a. gross, + £47,448 TFLS
    3. £13,583 p.a. gross + £90,554 TFLS

    Looking at the difference between them:
    1: £17,478 p.a. gross + £0 TFLS
    1 & 2: -£1662 p.a. + £47,448 TFLS (28.5x)
    2 & 3: -£2233 p.a. + £43,106 TFLS (19.3x)

    So it appears that to get an extra £43k you're sacrificing £2.23k/year, a multiple of 19.3x, whereas to get £47k you only sacrifice £1.66k/year, a multiple of 28.5x.

    The biggest lump sum is a bad deal compared to the middle lump sum as you're sacrificing much more per year for the extra.

    The biggest lump sum is therefore likely to be a bad option in my opinion.


    Thank you for this. It is a very interesting way of looking at it, and I would never have thought of it on my own. Now you have shown me, I can even take it a step further:

    By the same token, & using your order of the options:

    Comparing Options 1 & 2: To get an extra £1,662 p.a. in pension, I would have to sacrifice £47,448 of TFLS. This equates with £28.5 of TFLS for every £1 p.a. of pension. Whereas:

    Comparing Options 2 & 3: To get an extra £2,233 p.a. in pension, I would have to sacrifice just £43,106 of TFLS. This equates with only £19.3 of TFLS for every £1 p.a. of pension.

    So, the biggest pension (your Option 1) is a bad deal compared to the middle pension (your Option 2), as I would be sacrificing much more of my TFLS for the pension increase.

    As you have already shown that the biggest lump sum option (your Option 3) is a bad deal, and I have just shown that the biggest pension option (your Option 1) is a bad deal, your Option 2 (the standard, middling option) is the best value for money.
  • skycatcher
    skycatcher Posts: 330 Forumite
    Name Dropper First Post First Anniversary
    Options
    Without doing much analysis my thought was that the options introduced by BT over the standard offering were all designed to save the pension fund money rather than benefit the individual.... But maybe I'm just a cynic!
  • robin61
    robin61 Posts: 677 Forumite
    Options
    skycatcher wrote: »
    Without doing much analysis my thought was that the options introduced by BT over the standard offering were all designed to save the pension fund money rather than benefit the individual.... But maybe I'm just a cynic!

    Yep thats always been my thoughts. I too have at times been accused of being a cynic. But I bet we are not wrong !
  • Simple_Soul
    Simple_Soul Posts: 48 Forumite
    Options
    robin61 wrote: »
    It was a bit of a blow when they changed it from RPI to CPI though.

    I left BT 10 years ago, so I am out of touch. Why didn't the unions fight this? I would have thought it was one battle worth fighting.
  • Tom99
    Tom99 Posts: 5,371 Forumite
    First Post First Anniversary
    Options
    Simple_Soul wrote: »
    I left BT 10 years ago, so I am out of touch. Why didn't the unions fight this? I would have thought it was one battle worth fighting.

    [FONT=Verdana, sans-serif]Same happened with Civil Service pensions, now CPI, although there are other major Co's who are paying out pensions based on RPI[/FONT]
  • robin61
    robin61 Posts: 677 Forumite
    edited 27 March 2018 at 9:24AM
    Options
    Simple_Soul wrote: »
    I left BT 10 years ago, so I am out of touch. Why didn't the unions fight this? I would have thought it was one battle worth fighting.

    The rules of scheme B said something along the lines of that inflation linking would be as per the way the Government measured inflation. When this changed so did scheme B.
    However BT have just tried to do the same with scheme C. The rules of scheme C specifically mention RPI. BT have recently lost a high court case on the matter. An appeal to the Supreme Court might well happen but so far so good for scheme C members.

    I think it's pretty difficult for the Unions on pensions. I believe less than half of employees are currently on defined benefit schemes. So getting support from the rest to fight for DB schemes is going to be difficult.
  • mgdavid
    mgdavid Posts: 6,705 Forumite
    First Anniversary Name Dropper First Post
    Options
    robin61 wrote: »
    Yep thats always been my thoughts. I too have at times been accused of being a cynic. But I bet we are not wrong !

    Spot on.
    Remember, a cynic is only an optimist with experience !
    The questions that get the best answers are the questions that give most detail....
  • tigerspill
    tigerspill Posts: 774 Forumite
    First Anniversary Name Dropper First Post
    Options
    Simple_Soul wrote: »
    I left BT 10 years ago, so I am out of touch. Why didn't the unions fight this? I would have thought it was one battle worth fighting.

    Unfortunately the union is only as strong as the members. This only impacts long term employees as any joining in the last 17 years isn't impacted s they are on the DC pension.
    So employees I guess are apathetic and not up for the fight (in essence not up for serious industrial action/striking). The union can only fight with the members real support and would take action.
  • Simple_Soul
    Simple_Soul Posts: 48 Forumite
    Options
    robin61 wrote: »
    The rules of scheme B said something along the lines of that inflation linking would be as per the way the Government measured inflation. When this changed so did scheme B.
    However BT have just tried to do the same with scheme C. The rules of scheme C specifically mention RPI. BT have recently lost a high court case on the matter. An appeal to the Supreme Court might well happen but so far so good for scheme C members.

    I think it's pretty difficult for the Unions on pensions. I believe less than half of employees are currently on defined benefit schemes. So getting support from the rest to fight for DB schemes is going to be difficult.

    Thanks; that makes sense.
This discussion has been closed.
★ ★ ★ Meet your Ambassadors

Categories

  • All Categories
  • 343.2K Banking & Borrowing
  • 250.1K Reduce Debt & Boost Income
  • 449.7K Spending & Discounts
  • 235.3K Work, Benefits & Business
  • 608K Mortgages, Homes & Bills
  • 173.1K Life & Family
  • 247.9K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards