One ruling was made in the Court of Appeal in December 2018 and relates to a BT bid to switch from the using Retail Prices Index to the Consumer Prices Index when calculating annual pension increases for members of Section C of the BTPS. The CPI is generally lower than RPI, meaning less money for those affected.*
The other ruling was made in in the High Court in November 2018 and concerned how future payments are calculated for 8,000 members of Section B of the BTPS in the light of a Treasury decision about public sector pension schemes.**
Prospect national secretary Noel McClean said: “We are very disappointed that BT is still set on reducing its legacy pension obligations, despite the High Court and Court of Appeal already ruling against the company in two separate cases.
“If the company succeeds in its new challenges, overall 88,000 members across the two sections of the BTPS could lose thousands of pounds each.
“Last year BT closed the BTPS for future accrual and transferred the remaining 11,000 managers in that scheme into the defined contribution BT Retirement Saving Scheme. These people – along with many others who have already retired – have been led to believe that rights accrued so far in the BTPS would be protected.
“But BT wants the courts to allow it to take away money that pension scheme members are entitled to and transfer it to shareholders. That’s unfair and two leading UK courts have already said so. We think BT should accept their rulings.”
Case 1: CPI v RPI*
On 4 December 2018 BT lost its legal bid in the Court of Appeal to switch the index for annual pension increases for people in Section C of the BTPS from the Retail Prices Index (RPI) to the normally lower Consumer Prices Index (CPI). The Court of Appeal had upheld an earlier High Court decision against BT. https://www.prospect.org.uk/news/id/2018/December/4/Appeal-Court-rejects-BT-bid-reduce-pension-increases-80-000
More than 80,000 members of Section C each stood to lose an estimated £24,000 in pension benefits if BT had won, with an estimated £2bn of wealth transferring from BT pensioners to shareholders.
Case 2: Link to public sector **
On 29 November 2018 the High Court ruled against BT, after the company sought to reduce pension increases for 8,000 members of Section B of the BTPS – those reaching State Pension Age (SPA) between 6 December 2018 and 5 April 2021. https://www.prospect.org.uk/news/id/2018/November/29/BT-loses-High-Court-bid-reduce-pension-benefits
Their benefits would have fallen by around £120m; with an average loss of about £15,000 per member. Younger members of Section B could also be at risk, depending on future government decisions.