Dismay and determination as BT pensions review formally announced
A stark warning has been issued to BT that the CWU is resolute in its determination to defend members’ pensions in the wake of the company’s unwelcome but widely anticipated decision to trigger a review of the BT Pension Scheme (BTPS).
Tens of thousands of BTPS members across the country were yesterday formally notified of the forthcoming review, the rationale for which was briefed to branch reps by BT’s head of employee relations, Tom Keeney, at a specially convened CWU branch forum on Wednesday.
Reps left the company in no doubt as to their anger and dismay at the move – reinforcing the warnings already issued by national negotiators that any unilateral attempt to close the scheme to future service accrual will be opposed “by all means including industrial action.”
They also signalled branches’ unequivocal determination that the forthcoming talks on the future of the BTPS must run parallel to negotiations in support of the union’s outstanding claim for significant improvements to the BTRSS – the money-purchase pension scheme that has always been the poor relation to the defined benefit BTPS which closed its doors to new members in 2001.
Both policy positions had previously been unanimously reaffirmed by delegates at CWU Annual Conference in April – the Conference debates proving especially timely given that BT’s initial announcement that it was invoking a 12-month termination clause in the legally-binding 2008 pensions agreementcame just weeks later, in May.
That move followed media reports that, ahead of the scheme’s triennial valuation, which is due later this year, the BTPS deficit – the shortfall between the BTPS assets and the expected cost of providing benefits already promised to members – had reached £13.9bn by the end of June 2016, up from around £10bn in 2015.
At the time of the 2008 agreement – which introduced career average benefits, raised the normal pension age to 65 and increased member contributions to enhance the scheme’s long-term sustainability – the deficit was estimated to stand at around £3.4bn, based on the 2005 valuation.
Despite BT making top-up payments totalling £6.2bn since 2009, the continuing expansion of the deficit has been caused in large part by the current prolonged period of historically low interest rates – though rising life expectancy, above inflation pay rises during much of the period in question and increased regulatory pressures have also been contributory factors.
Yet despite a detailed presentation by management on the problems presented by the BTPS deficit – summarised in the communication received by all BTPS members yesterday – branches delivered the clearest possible message to management that members are prepared to fight, if necessary, to secure a fair and just pensions settlement from the forthcoming review.
Jeffrey Till of Greater London Combined branch drew spontaneous applause with his observation that “pensions are deferred pay – this is our money you’re talking about” – and Phil Thomas of Somerset, Devon & Cornwall branch pointed out that the CWU’s ‘red line’ on the BTPS remaining open to existing members for future service accrual has remained unchanged for decades.
Urging the company to give careful consideration to the “very serious threat” being made by the CWU that “if you mess with our pension schemes wewill take action”, Phil pointed out that, for BTPS members in Openreach, the announcement of the pension review was compounding the huge “leap of faith” they are already being asked to make with regards to their looming mass TUPE transfer to a legally separate Openreach Ltd.
Simon Edwards of Mid Wales, the Marches and North Staffs branch pointed out that feelings were already running high amongst BTPS scheme members over not just the company’s refusal to make this year’s pay increase fully pensionable, but also the subsequent administrative delays in its payment.
“You’ve done a great job in winding up our members in the BTPS over the last few months,” Simon observed – adding: “You’re creating a perfect storm for action!”
Many branches raised member dissatisfaction over the widely perceived inadequacies of the BTRSS, with some reps responding angrily to Tom Keeney’s insistence the scheme was a good one, and that perceptions that DC (defined contribution) schemes were “terrible” compared with DB (defined benefit) schemes like the BTPS were unhelpful.
“I don’t think it’s a good scheme,” stressed Chris Dukes of Mid Wales, the Marches & North Staffs branch, adding: “If I carry on paying in what I’m paying in, and you (BT) carry on paying what you pay in, I’m going to be in poverty when I retire.
“You say that over half of the people in BT are in the DC scheme – well, you should be looking to do something for them.”
Jonathan Bellshaw of Lincolnshire & South Yorks branch agreed, insisting: “You need to improve the BTRSS and you need to do it soon.”
CWU national negotiators are already committed to use the current pensions review to achieve just such an aim – with the union resolute in its demands for:
- A significant increase in BT contribution levels to the BTRSS, with the company doubling member contributions instead of only marginally more than matching them, as BT does at present
- An increase in the minimum underpinning payment of £1,500 per annum that BT currently makes for the lowest paid BTRSS members – on the basis that the level of underpinning has remained the same since 2010, meaning that now only those earning less than £18,750 receive the top-up
- BT to take on the administration costs of the scheme, rather than passing them on to members
- A significant improvement to medical retirement benefits
- Allowances such as London Weighting, shift allowance and unsocial hours payments to be made pensionable, – something which isn’t the case at present.
Deputy general secretary Andy Kerr concludes: “While this review is clearly unwelcome and unsettling for BTPS members, it’s incumbent on the CWU to enter constructive discussions with the company, because ultimately it’s crucial we ensure the long-term sustainability of our members’ pensions.
“We shouldn’t lose sight of the fact, however, that this review does present an opportunity for the CWU to seek to address the significant shortcomings of the BTRSS – of which around half of BT’s current UK workforce are members.
“Regarding the BTPS, the company has placed a number of options on the table. These range from the wholly unacceptable closure of the BTPS to future accrual, with in-service members switching to the BTRSS – all the way through to potential adjustments that could be made to the 2008 agreement, which can be modified by mutual consent.”
Andy concludes: “The company has been left in no doubt that the CWU is serious about using industrial action, if necessary, to keep the BTPS open for current members – and, encouragingly, BT has stressed it is seeking to establish an agreed way forward.”