BT Pension Scheme – Latest Position for Members

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On 15th November 2017, BT launched a formal 60-day consultation on proposing changes to the company pension scheme – the BT Pension Scheme (a defined benefit arrangement).   Although one of the largest pension schemes in the private sector, with around 300,000 members, it is reported to have a deficit of around £13.9 billion.

The purpose of the consultation was look at the options to reduce the deficit and make the scheme more affordable. The consultation period, which finished on 17th January, was a period where members had the opportunity to look at the BT’s proposed changes to the scheme.


BT essentially put forward 2 proposals for their members:

The first proposal was to close 2 “sections” (Sections B and C) of the BT Pension scheme (BTPS) for members from 1st April 2018 and use the BT Retirement Savings Scheme (BTRSS) – which is a defined contribution (or money purchase) for future service.

Transitional additional contributions would be paid by BT into the BTRSS for up to 10 years.


The second proposal, team Members to continue membership Sections B and C of the BTPS after 31st March 2018 on a significantly amended basis.

As one cost saving measure, BT sought a decision from the High Court to change the index used to calculate pension increases paid in the future to members of Section C of the BT Pension Scheme (BTPS) from the Retail Price Index (RPI) to the Consumer Price Index (CPI).  RPI almost always gives a higher figure for inflation than CPI does. By switching to CPI, this could save a scheme, with 300,000 members, millions each year – when the member’s ongoing pension payments are increased. 


Since the start of the consultation process the CWU (Communications Workers Union) had been urging their member’s, in the BT Pension Scheme, to reject the proposals and urged members to respond accordingly during the consultation period (which ended on 17th January 2018).

Following the conclusion of BT’s consultation, on 5th February 2018, BT confirmed that it will close its defined benefit BT pension scheme for all “managers” (where there are an estimated 10,000 people, under that category, in the scheme), with contributions going into the BTRSS from 1st June 2018.

As for ‘team members’ in the BTPS, BT is currently still reviewing their position in the scheme.

Inflation increase

However, BT’s plans to reduce its pension deficit by changing its’ inflation from RPI to CPI, were rejected by the High Court on 19th January 2018 – meaning BT had to think of other cost saving measures.

One of the other cost saving measures, announced by BT, is to pull the administration of the BT pension scheme back ‘in-house’. BT were 3 years into an 8-year contract with Accenture but are terminating this contract and transitioning the administration back to BT this year.

How these Proposed Changes could affect you

What are the major differences between a Defined Benefit and Defined Contribution scheme?

If you are a member of a defined benefit scheme, you will receive a guaranteed (indexed) pension in retirement (based on salary and years of service) – the cost of which is covered by your employer. A defined contribution scheme, on the other hand, will provide you with a fund at retirement (accumulated through a combination of employer and your own pension contributions – together with investment growth) but, unlike a defined benefit scheme,  there are no guarantees of what income a member could receive, at retirement, as this would be dependent on what the fund has grown to and the sustainability of the investment in the fund to provide a desired income level.

Therefore, by moving from the defined benefit scheme to the defined contribution scheme, there is less certainty now on what you will receive in retirement.

If you are a current or deferred BT Pension Scheme member and would like to know how these recent and proposed changes may affect you  or wish to know more about the options available as a result of these changes please contact bdhSterling to speak to an adviser https://www.bdh-new.local/contact/