BT loses legal bid to switch to a cheaper pension rate

BT has lost another legal battle to cut payouts for thousands of pensioners, dealing a blow to the company’s plans to shrink the black hole in its retirement fund.

The telecoms giant wants to change the way it calculates pension rises for 83,000 current and former workers, switching the measure of inflation from the retail price index (RPI) to the consumer price index (CPI).

This would lead to lower payments to those members and reduce the amount of funding required for the scheme.

however, the company needs court approval for the switch, with judges asked to decide if it has the power to switch to CPI.

BT argued it should be able to do this after consulting with the scheme’s trustees.

But its case in the high Court was defeated earlier this year and yesterday at the Court of appeal Lady Justice asplin upheld that decision by mr Justice Zacaroli, which found that BT did not have the power to switch the index to CPI. BT’s only remaining route is to ask for the case to be heard by the supreme Court.

a BT spokesman said it was disappointed ‘and will now consider the judgment in detail in order to decide next steps’.

The BT Pension scheme is one of the biggest private sector pension funds in the UK, with almost 300,000 members.

Like many other final- salary schemes it was closed to entrants in 2001, with new staff joining a separate defined contributions scheme. But original members of the scheme continue to build their nest eggs.

however, in recent years the fund has racked up a deficit of more than £11bn, partly because of rock-bottom interest rates, and BT says it is becoming increasingly difficult to support.

analysts say switching members over to CPI could reduce the deficit by as much as £1bn.

BT said this would lead to more fair and affordable pensions. Unions branded any cut as a ‘slap in the face’ for savers.