BT appeal on guaranteed minimum pensions indexation dismissed

In May 2018 the telecom company started a legal process against HM Treasury, which announced in January that year that public sector pension schemes would pay the increases on GMPs, aiming to cover a gap that was created by changes to calculation methods when the single-tier state pension was introduced. 

This solution, which was expected to cost the government £5bn, also affects 8,000 members of the BT Pension Scheme, since the pension fund still has links to the Civil Service Pension Scheme, dating back to before the FTSE 100 company was privatised in 1984.

According to the trade union Prospect, if BT’s appeal had been successful, the benefits of these employees would have fallen by around £120m, with an average loss of about £15,000 per member.

BT argued the "unintended impact" of the Treasury's decision was unfair, but in its judgment in December 2018 the High Court determined the Treasury's decision was valid. 

According to Allen & Overy, which acted for the trustees in this case, BT appealed on the grounds that there had been errors of both fact and law in the 2018 decision.

However, the Court of Appeal considered that the court had been entitled to make those findings of fact, and therefore did not go on to consider the other grounds of appeal.

A BT spokesperson said: “In early 2018 the government made a decision about how benefits are increased in public sector pension schemes, and by implementing it in a particular way it created an unintended impact on the BT Pension Scheme.

“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.”

The spokesperson added: “While we are disappointed, we accept the Court of Appeal’s decision.”