BT loses DB scheme index switch appeal

Written by Jack Gray
04/12/2018

The Court of Appeal has upheld last week’s High Court ruling against BT in a case regarding switching the indexation of pensions for around 80,000 members of its DB pension scheme.

BT lost its legal bid to change the index for calculating pension increase for its members in Section C of its scheme, from the Retail Prices Index (RPI) to the Consumer Prices Index (CPI).

Had the appeal been upheld, more than 80,000 members stood to lose an average of £24,000 in pension benefits, as CPI is usually lower than RPI.

The switch would have transferred an estimated £2bn of wealth from BT pensioners to shareholders.

Commenting on the ruling, Prospect national secretary Noel McClean said: “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 £2bn 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."

BT’s request to switch indexes was initially rejected by the High Court in January 2018, in which BT argued that RPI had “become inappropriate” for its scheme.

Following the High Court decision, the Court of Appeal dismissed BT’s claim, concluding that the scheme rules had been interpreted correctly at the earlier ruling.

The rejected appeal comes after a similar case involving the charity Baranardo’s, in which the Supreme Court also ruled that the organisation must continue to use RPI and could not switch to CPI.

BT is now considering whether or not to seek further appeal.

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