UK. BT loses appeal to change method of pensions calculation
BT has lost a legal bid to make changes to its pension scheme that unions claim would have transferred an estimated £2bn of wealth from scheme members to shareholders.
The court of appeal dismissed the company’s request to change the way it calculates increases to pensions – a move that would have affected more than 80,000 members of the scheme.
These members each typically stood to lose an estimated £24,000 in future pension benefits if the appeal had been upheld, according to the union Prospect.
BT sought a ruling on whether it could change the index used to calculate pension increases paid to “section C” members of its defined benefit pension scheme. It currently uses the retail prices index (RPI), but believes the rules allow a switch to another index in certain circumstances. Sections A and B of the scheme are linked to the consumer price index (CPI).
CPI is generally lower than RPI, which is an index no longer widely used in government – prompting BT to argue that it had become inappropriate for increasing pensions.
Prospect said BT was “seeking to cut the future incomes of BT pensioners and current employees by tens of thousands of pounds in order to transfer an estimated £2bn to shareholders”.
The high court decided in January 2018 that it was not possible to change to another index, and the court of appeal has now upheld that decision.
Other organisations have been allowed to make the switch in order to save money. In October it was announced that from May 2019, the returns for savers from National Savings & Investments index-linked savings certificates would be linked to CPI rather than RPI. NS&I is backed by the Treasury and said the move would result in a saving to the taxpayer of £610m over the next five years.
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