BT has suspended its flexible retirement option while it reviews the conditions under which it will consent to BT Pension Scheme members taking early payment of their pension while continuing to work at the communications company.
Active members of the scheme have been able to apply to receive their pension early and continue to be employed by the company since April 2006. The workers’ main union has criticised the suspension.
BT's flexible retirement options
Pre-1971 entrants can apply for early pension from 55. Pension and lump sum will be calculated in the same way as for early retirement before age 60.
December 1971 - March 1986 entrants can apply for early pension from 55. Pension and lump sum will be calculated in the same way as for early retirement before age 65.
April 1986 - March 2001 entrants can apply for early pension from 50. Pension and lump sum will be calculated in the same way as for early retirement before age 65.
Under the scheme’s rules the sponsoring employer has to consent to the benefits being taken. BT is looking at the conditions under which it approves such payments.
“We’re conducting a review of our flexible retirement policies and are consulting with the unions,” said a spokesperson for BT. In a separate statement, the spokesperson added: “The review is progressing well and we will announce any subsequent changes in due course.”
Active members are able to register an interest in taking their pension before normal retirement age and will be updated once the review has been completed.
The Communication Workers Union, which represents employees of BT, has made it clear to the company that it views the suspension of this flexible option as “highly regrettable” given its popularity.
“BT has agreed to review their decision but have suspended the facility while talks are taking place, amid concerns that a sudden rush by some employees to activate their pensions could pre-empt the outcome of the discussions and lead to over-hasty decisions,” added a spokesperson.
The CWU is seeking independent legal advice to establish the legality of BT’s decision.
“In deciding whether to consent or not the employer really is only subject to the duty of good faith,” said Peter Ford, head of pensions at law firm Norton Rose Fulbright.
However the law around the duty of good faith is quite restrictive and allows the employer to take account of its own interests, Ford said, adding: “It would normally be quite a hard argument to succeed with.”
BT has three different set ups for this flexible retirement option, depending on when members joined the scheme.
Phased retirement
Nationwide Building Society became one of the leading employers to scrap retirement ages across all contracts and business areas in April 2011.
The concept of “cliff-edge” retirement, where employees stop working entirely after drawing their pension, is disappearing, said Gary Smith, head of DC consulting at Capita Employee Benefits.
“[We will] definitely see this from April next year with the proposals around DC schemes,” said Smith. “A lot of people will take early retirement.”
