No 156/2004 Ref: BTU 3/20 (a) 14th April 2004
TO ALL BRANCHES WITH BT MEMBERS
Dear Colleague
BT SMART PENSIONS
Further to LTB 690/2003 the Union has been informed that BT will now be going ahead with Smart Pensions from 1st June. As previously reported the Union has agreed to the introduction of Smart Pensions as suitable safeguards have been put in place to protect individual pension entitlements and state benefits.
There will be announcements across BT on this issue on the 15th April and Branches are requested not to circulate information on this issue until 10am on that day.
SMART PENSIONS
BT is introducing Smart Pensions for the BT Pension Scheme (BTPS).
Under the new arrangements, members will stop paying their 6% contributions and instead these will be made by BT. To reflect the fact that BT is making the employees' pension contributions, contractual pay will be reduced, so cutting National Insurance contributions for both members and BT. The changes to contractual pay will operate in a similar way to Profit Related Pay which was in place a few years ago.
The maximum saving from Smart Pensions is £169 per year. The maximum saving applies to someone earning £30,000 a year. Due to the way National Insurance contributions are calculated, individuals earning less, or more, than £30,000 will save less. For example, someone earning £20,000 will save £113.
Smart Pensions is voluntary. If you do not wish to participate then members must opt out by 28th May 2004.
A copy of the BT booklet is attached for information.
SAFEGUARDS
The Union has ensured that a series of safeguards are in place to protect individual pensions and state benefit entitlements. These are detailed in the letter from BT dated 8th April 2004, which is attached. The main points are as follows:
· There will be no impact on pay increases, overtime, allowances or bonus payments as these will all be calculated on “base pay” - the pay received before the introduction of Smart Pensions.
· There will no reduction in the pension you receive when you retire.
· The Trust Deed of the BTPS will be amended so that there will be no difference between contributing and non-contributing members of the BTPS.
· BT will not reduce the 6% contribution made on behalf of members in future without agreement from the CWU.
· BT will make additional payments where necessary to ensure that there is no loss of statutory maternity/paternity/adoptive leave payments.
· Members with 40 years in the BTPS will be opted out of Smart Pensions automatically.
· There will be no adverse impact on: those on long term sick pay, Section A members, tax relief on contributions, or Working Tax Credits.
· Those buying Added Years or making AVC payments will be able to increase their contributions.
· Special arrangements have been put in place for those with nearly 40 years service who are due to retire between now and April 2006. If necessary BT will pay out additional pension to individuals in this category to ensure that they do not lose out as a result of Smart Pensions.
· Members earning £6,000 or less a year will be written individually to warn them that they may not benefit from Smart Pensions - the exact impact will depend on whether or not they have a second job.
· There is no impact on the State Second Pension as BTPS members are opted out of the State Second Pension.
· If BT fails to identify an individual loser, or underestimates the level of potential loss it will make good any financial loss caused by Smart Pensions. BT will also ensure that if Smart Pensions are withdrawn in future no-one will be worse off in pension terms. (These guarantees will not apply to individuals who have chosen to participate against BT's advice).
BT RETIREMENT PLAN
The BT Retirement Plan has been removed from Smart Pensions at the moment as a result of concerns expressed by the CWU about the impact on the State Second Pension. BT has agreed that if Smart Pensions is extended to the BTRP in future, then CWU represented grades will have to opt into the scheme.
KEY DATES
Members of the BTPS will be getting an email on this issue from BT on 15th April and will receive a copy of the BT booklet from the 19th April onwards.
Any member that does not want to participate must opt out by 28th May 2004.
Members who participate in Smart Pensions will be able to opt out in June 2005 if they wish. Opt outs are possible earlier than this as a result of a significant change to individual circumstances such as; marriage, the birth/adoption of a child, divorce, or changing hours.
INDIVIDUAL ADVICE
Members can contact the BT Smart Pensions helpline if they have any enquiries. The number is 0800 0855749.
The decision about whether to join Smart Pensions or not must be made by individual members. The Union is legally prohibited from issuing financial advice
Any member who cannot decide what action is appropriate should seek independent financial advice. Independent Financial Advisors can be contacted via the IFA Helpline 0800 085 3250.
CWU LEAFLET(pdf format)
Attached to this LTB is a basic CWU leaflet including a Q and A that can be circulated to members. Separately a glossy version of the leaflet will be sent directly to branches shortly on the basis of 2 per 10 BT members.
A copy of this LTB will also be placed in the members section of the CWU website.
Yours sincerely
Nigel Cotgrove
Assistant Secretary
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