BTPS Commutation Factors – ‘Enhancement’
5 July 2011
In April 2011, it was announced that the BT Pension Scheme (BTPS) actuarial factors had been changed with effect from 1 July 2011, but the changes were not been fully or adequately communicated. Most of the changes to the BTPS factors are disadvantageous to individuals, particularly those in Section A or B.
Following representations from the CWU and Prospect, BT has decided to introduce special arrangements to ensure that no existing BT employee intending to retire by 30 September 2011, could be inadvertently disadvantaged or impacted unfairly by the changes. BT describes this as a Pension Enhancement Window.
BT will be contacting all employees who will be 50 or over on 30 September 2011 who will potentially affected by this.
Under the Enhancement Window, until 30 September 2011, anyone leaving BT and immediately taking their pension will be covered by the pre-1 July 2011 factors if that would be better for them. There are no circumstances where the new factors would be better for anyone taking a Section A or B pension but there are circumstances for Section C members that the new factors could be better. In those cases, the most beneficial factors will be used.
For Section A and B members and some Section C members, the use of the old pre-1 July 2011 factors can generate a significantly increased pension and lump sum, compared to what would be available after this date. It is impossible for us to be specific about the value of this enhancement – every individual case will be different – but this does represent a significant potential benefit to individuals. Consequently, members are encouraged to look at this issue very carefully and consider seeking independent financial advice.
Paid Leaver Arrangements
The Enhancement window will also apply to anyone leaving BT as part of a paid leaver arrangement until 30 September, provided that they take their pension immediately. Also anyone who has taken their pension on the 1 July or thereafter will have their pension reviewed to see if the Enhancement would be beneficial.