CWU Recommends Sustainability Agreement For BT Pensions

After weeks of hard negotiation, the CWU has announced today (Tuesday) that it is supporting a series of changes to BT’s UK pensions.

Andy Kerr, deputy general secretary, said: “The CWU has fought hard to secure the best possible negotiated deal on the future of pensions for BT employees. We have taken decisive action to protect the long term interests of our members in the BT Pension Scheme (BTPS) and improve arrangements in the Defined Contribution pensions.

“We have secured an Agreement to ensure the future sustainability of the BT Pension Scheme and keep it open for future service while improving BT’s contributions for the Defined Contribution pension members.

“We have challenged BT every step of the way over the last few months and we have significantly altered BTs proposals. In the BTPS we have ensured that service before April 2009 remains linked to final salary, that the retirement age rise is phased in, and that contribution rates are in future linked to income levels.

“For Defined Contribution members we have improved BT’s contributions and ensured that the lowest paid benefit the most.”

The CWU will be conducting a consultative ballot of all BT members on the proposed agreement starting in the week commencing 24th November.

BT has opened up discussions with the Union as a result of giving sound reasons why they need to review the various BT penions schemes.

An update letter on the talks with BT over their pensions review has been posted to all CWU members in BT and is expected to arrive with them on Tuesday 14th October.

Here are the major points from the letter:

SUSTAINABILITY
The union is pressing BT for an unequivocal commitment to the future of the BTPS. We must see that BT’s commitment is real and
tangible and that proper funding will be in place. Above all, we must ensure that any agreed changes will stand the test of time.

POTENTIAL CHANGES TO THE BTPS
BT has proposed a number of changes in order to reduce costs and minimise financial risk. BT says that benefits built up to date are protected. BT’s proposed changes are summarised below and would apply to section B and C members. Section A members are protected under BTPS rules and, for as long as they remain Section A members, the proposed changes would not apply to them.

Increase normal pension age:
Any new pension age would apply to service built up after the change. The union recognises the general trend in the UK towards a higher pension age. However, we believe any such change must be phased in.

Increased Membership Contributions: Whilst recognising the cost of pensions has risen any increase must not be excessive.

Move to Career Average: This would mean future pensions would be calculated on average salary over a period of time. This would be done by calculating a pension on an individual’s salary in each year. This is then increased until normal pension age using a formula typically linked to inflation/salary. We are exploring this option further with BT.

Reduce Accrual Rates:
Accrual rates define how quickly a pension builds up over time. Currently the rates are 1/80th in Section B plus a 3/80th lump sum and 1/60th in Section C. The union will not accept a major reduction in accrual rates.

Reduce Pension Increases: Currently retirement pensions are increased by either inflation in Section B, or inflation up to 5% in Section C. Any reductions would reduce the real value of pensions over time and are therefore unacceptable.

Remove Allowances: Currently some allowances, including London Weighting and shift payments, count towards pensionable salary. If these were removed it would significantly reduce pensionable salary for a large number of members, which would be
unacceptable.

RISK REDUCTION INITIATIVES
Separately BT has proposed a number of initiatives solely designed to help reduce future financial uncertainty associated with the running of the BTPS. The proposals would include increased membership options. We are discussing these in more detail.

BT RETIREMENT PLAN AND SYNTEGRA LTD FLEXIBLE PENSIONS PLAN
At the moment BT matches member contributions between 4% and 10%. BT is considering an increase in Company contributions.

As part of this change, BT is looking at the way these benefits are delivered with a view to reducing costs and increasing investment options.

The union believes that improvements to these schemes are essential to provide adequate retirement benefits. An increase in BT contributions is essential.
Furthermore, any change to the way in which the BTRP operates must protect members interests.

You can download the full letter in pdf form by clicking on the pic above.

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