Court of Appeal upholds that BT cannot change index used to calculate pension increases


The Court of Appeal has upheld that telecommunications organisation BT cannot change the index it uses to calculate pension increases for the approximately 80,000 members in section C of its defined benefit (DB) pension scheme.

BT went to the High Court in December 2017 to seek a decision on whether it could change the index with which it calculates pension increases paid in the future to section C members of the BT Pension Scheme (BTPS) from the Retail Prices Index (RPI) to the Consumer Prices Index (CPI).

The CPI is currently used to calculate pension increases for BTPS members who are within sections A and B of the DB scheme.

According to the trade union Prospect, changing the index to calculate pension increases could have transferred an estimated £2 billion of wealth from pensioners to shareholders, while affected members of section C could have lost around £24,000 in pension benefits.

The High Court confirmed on 19 January 2018 that BT could not make this change. This decision has now been upheld by the Court of Appeal in December 2018.

These decisions centre on the wording used in the rules of the BTPS, citing the requirement that RPI must have become inappropriate before another index for increasing pensions could be introduced.

A spokesperson at BT said: “We are disappointed with the outcome and will now consider the judgment in detail in order to decide next steps.”

As at 31 March 2017, the BTPS has 21,000 active members, 38,500 deferred members and 23,500 pensioners included within its section C member population. The BTPS has 296,000 members in total.

The Court of Appeal has further refused permission for BT to appeal to the Supreme Court.

Noel McClean, national secretary at Prospect, added: “We welcome the Appeal Court’s decision to uphold the original High Court ruling.

“BT was seeking to cut the future incomes of BT pensioners and current employees by tens of thousands of pounds in order to transfer an estimated £2 billion to shareholders, and Prospect does not believe this was acceptable.

“Only last week, the High Court prevented BT from attempting to cut the benefits of 8,000 people in Section B of the same pension scheme, albeit using a different mechanism.

“Prospect welcomes both rulings, which protect the interests of employees rather than shareholders.”