In early 2018 the government decided to extend protections in relation to the way benefits are increased in public sector pension schemes. This decision had a knock-on effect on some people in Section B of the BT Pension Scheme, and BT took legal action to challenge this.
The Treasury had decided to protect certain increases for members of public sector pension schemes. Without that protection, members in these schemes – and some in the BT Pension Scheme – would have lost part of the increase on a proportion of their payments known as the Guaranteed Minimum Pension (GMP).
The Court of Appeal’s rejection of a judicial review effectively protects 8,000 Section B members – those reaching State Pension Age (SPA) between 6 December 2018 and 5 April 2021.
Had the judicial review gone ahead they faced losing an average of about £15,000 per member in future pension payments – a total of around £120m. Younger members of Section B were also at risk of being affected, depending on future government decisions.
The current rules of Section B of the BTPS require the trustees to follow the increases paid by public sector pension schemes under protections applied when BT was privatised in 1984.
Prospect National Secretary John Ferrett said: “We are pleased that a judicial review will not be happening. While this sounds quite complicated, in a nutshell the Court of Appeal’s decision means thousands of people will continue to have their pension entitlement protected, which we think is fair.”
BT said: “We pursued a legal process as we believed there are fairer ways for government to meet its commitments to public sector employees without creating this impact on BT’s private sector scheme, and hoped the government would reconsider the route it decided to take.”
However, BT added: “While we are disappointed, we accept the Court of Appeal’s decision.”