BTPS: New Flexible Retirement Terms
4 September 2014
In February BT suspended the ability of employees that are in the BT Pension Scheme (BTPS) to activate their pension early while continuing to work for BT. This option is known as flexible retirement. The initial intention was to suspend this option for a short period, while the issue was discussed between BT, CWU and Prospect. In practice, those talks turned out to be a great deal more complex and involved than was initially envisaged.
No Agreement with Unions
Discussions with BT on this issue have now concluded without agreement with the unions, and BT will be writing to BTPS members setting out the approach the Company intend to adopt in the future. The CWU has argued that while the process should be improved, the existing option should be retained for BTPS members over the age of 55, especially given the general trend towards increasing the flexibility of pension arrangements. However, the Company has maintained that the existing arrangement should not continue to be offered for a variety of reasons including;
- those who take pension and continue working create a “cliff edge” with a significantly higher reduction in income occurring at “actual” retirement giving greater reliance on obtaining a leaver payment,
- the current option encourages individuals to take pensions earlier than they would otherwise have done, and this increases uncertainty around future BT workforce management and risks increasing the costs of providing BTPS benefits.
New Flexible Retirement Policy
The Company is now introducing a new policy from 15 September 2014, which sets out the terms under which BT is “likely” to agree to future applications made for flexible retirement from the age of 55. These terms will apply to those under 65 in Section B; and those under 75 in Section C. For those in Section A, it has now been confirmed that BT permission is not required, however, most Section A members do opt to move to Section B.
The terms are as follows:
- The member, their Line Manager and HR Business Partner confirms that they have tendered their resignation and will be leaving the Business within the following three months.
- The member, their Line Manager and HR Business Partner confirm that they have clearly stated their intention to leave the Business before 14th September 2016 and where the member confirms that they have received financial guidance, for example, having attended a Wealth at Work seminar.
- The member can demonstrate to BT financial hardship or that they may suffer material detriment as a consequence of their BTPS pension arrangements, which would be alleviated by early payment of their pension, but would not be overly detrimental to their future financial position.
- In addition, BT will continue to reserve its right to consent in certain other cases where it chooses to exercise discretion.
Policy Outside Terms of 2008 Agreement
Although there has been some relaxation of the blanket suspension of flexible retirement for the next two years, and the introduction of a financial hardship/detriment process, the option of working on and drawing a BTPS pension early will not now be generally available beyond September 2016.
We have reluctantly accepted that, between the age of 55 and 60, BT does have the right to withhold consent from individuals seeking to put their pension into payment. However, we do not believe the proposals the Company is putting into place are consistent with the terms of the 2008 Agreement between the Company and the unions on BT pensions. In our view, the 2008 pension Agreement gives individuals the right to put their pension into payment, while continuing to work for BT, without Company consent. Therefore, the CWU together with Prospect will continue to make our case to BT on this issue, and additionally we will be raising the matter with the BTPS Trustee.
In the meantime, BT’s new policy will apply and those who have already registered an interest in flexible retirement will be contacted directly by BT.