Prospect members agree to BT pension deal

The BTPS closed to new members in 2001. In October 2016, research by MSCI indicated that with a deficit of £9.5bn, the DB scheme could be the second-worst funded pension scheme in the world.

Seventy-four per cent of members voted for a 1-2 per cent pay increase based on performance and pay range. Sixty per cent of members supported the new pension proposals, as negotiated by the Prospect union.

We think that we’ve negotiated a good transition arrangement for them to move across to the DC scheme, and we’ve also improved the DC scheme for all members

Phillippa Childs, Prospect

There will be additional transitional payments for members who are being moved from BTPS to BTRSS, and there will be an increase in employer contributions for current BTRSS members.

Of BT’s DB scheme, 57 per cent of members voted for the proposals. Eighty-five per cent of BTRSS members agreed to the new measures.

A spokesperson from BT said: “We’re pleased that employees represented by Prospect have voted to accept the changes we’re proposing to our two largest pension schemes.”

BT's employee consultation is due to end on January 17. After this, "we’ll consider all feedback before announcing our plans”, said the spokesperson.

Union is pleased with deal

Negotiations between BT and Prospect, which represents BT managers, have taken place since May 2016, when BT announced a review of its pension arrangements.

Philippa Childs, Prospect national secretary, said that while the period had been tough, the union was pleased with the deal it had reached.

“We think that we’ve negotiated a good transition arrangement for them to move across to the DC scheme, and we’ve also improved the DC scheme for all members,” Childs said.

The transition payments may last for up to 10 years, and their value is contingent upon the age of the recipient.

A member below the age of 40 will get 2 per cent extra in payments for 10 years, so overall they would get an additional 20 per cent, according to Childs. A member who is over 60 will receive 2 per cent additional payments for two years.

Common sense prevails

BT has proposed closing the DB scheme for its 11,000 managers and transferring them to the BTRSS from April 1 2018.

The Communication Workers’ Union, which represents non-managerial staff at BT, closes its own consultation on January 17. It is recommending its membership to vote against BT’s offer. The two options for non-managerial staff put forward by BT are either a move to DC, or keeping the DB scheme open on reduced terms.

The CWU was not available for comment.

Hugh Nolan, president of the Society of Pension Professionals and director at consultancy Spence & Partners, praised the deal and espoused sympathy for BT.

“It seems like a victory for common sense,” he said. “Companies that are still running defined benefit schemes are really struggling to compete with other companies who aren’t.”

He added: “The guys who’ve been in the defined benefit scheme have been paid effectively a lot more than their [colleagues] in a less generous scheme for some years, so it’s not really a sustainable situation.”

Union strategies reflect their own memberships

BT’s task in presenting a palatable offer to members has been made more difficult due to the distance between Prospect and the CWU in their stances.

Eleanor Daplyn, partner at law firm Sackers, highlighted this divergence.

“On the Prospect side, you can see perhaps a recognition of the possibility that defined contribution is still a valuable benefit. It may not be defined benefit but that doesn’t mean that it’s not without worth.”

She said the move to improved DC showed some recognition of the issue of intergenerational fairness.

"It’s an interesting contrast with the CWU stance, which is a much more traditional ‘DB above all’ stance," she said, noting that from experience, unions were more inclined towards preserving DB for lower-paid workers, or to retain DB to an extent alongside a DC top-up.