LTB 277/19 – BT Pension Scheme: Section B Judicial Review of Guaranteed Minimum Pension Increases
No.277/2019
07 May 2019
TO ALL BRANCHES WITH MEMBERS IN BT
Dear Colleague,
BT Pension Scheme: Section B Judicial Review of Guaranteed Minimum Pension Increases
In November last year BT was refused permission by the High Court to seek a judicial review of decisions taken by the Government on pension increases for certain Section B members. The Court of Appeal has now given BT permission to appeal the High Court decision. BT is now considering whether to go ahead with the appeal.
Given the High Court’s clear rejection of BT’s case last year we are very disappointed that BT is continuing with this legal process. We do not believe that BT should go ahead with the appeal which is attempting to reduce the level of pension increases applicable for certain Section B members.
If BT is successful in the appeal and forcing a judicial review, this could ultimately impact on some 8,000 Section B members who reach State Pension Age (SPA) between 6th December 2018 and 5th April 2021. If BT’s action succeeds it would reduce the lifetime benefits of this group by about £120 million. It is possible that younger members of Section B could also be affected, depending on future Government decisions.
The issue has occurred because of a decision by the Treasury to protect certain pension increases for members of public sector pension schemes. Without that decision, public sector pension scheme members would have lost part of the increase on a proportion of their pension payments known as the Guaranteed Minimum Pension (GMP). The way in which the Treasury implemented these arrangements meant that they also applied to Section B of the BTPS as the Scheme still has some links to public sector pensions.
The Treasury previously announced protection for people reaching SPA from April 2016 to 5th December 2018 and BT did not challenge these increases. However, the company is attempting to challenge the way the protection was extended to people reaching SPA between 6th December 2018 and 5th April 2021 arguing that the protections were unintended and alternative arrangements were not properly considered.
The GMP arrangements are separate to the other indexation arrangements for the BTPS pensions which remain linked to CPI in Section B.
Attached is a copy of a statement from the BTPS Trustees. More background to this case is also detailed in LTBs 293/2018 and 674/2018.
Yours sincerely
Nigel Cotgrove
Assistant Secretary
Judicial Review update
Last year BT brought proceedings in the High Court challenging the validity of a decision taken by HM Treasury (HMT) relating to the method used to make certain increases to pensions in payment for public sector workers who reach State pension age between 6 December 2018 and 5 April 2021. The method chosen by HMT means that the same pension increases also apply to Section B members reaching State pension age in this period. The High Court determined that the decision made by HMT was valid.
The Court of Appeal have now granted BT permission to appeal this decision. Assuming BT proceeds with the appeal, the Trustee of the BT Pension Scheme will be neutral and, as they did in the first instance proceedings, will ensure the Court has all relevant information that it may need in order to make a decision. The Trustee will continue to provide updates if there are any further developments.