Letter to Branches

No 593/2011

Ref :NC/SD

Date: 5th July 2011

To all Branches with members in BT

Dear Colleague

BT Pension Scheme Commutation Factors – BT Announces an ‘Enhancement’ Window

LTB 505/2011 reported that BT Pension Scheme (BTPS) actuarial factors had been changed with effect from 1st July 2011, but that the changes had not been fully or adequately communicated. It transpired that most of the changes to the BTPS factors are disadvantageous to individuals, particularly those in Section A or B.

Following strong representations from the CWU and Prospect, BT has reflected on this issue and has now decided to introduce special arrangements to ensure that no existing BT employee intending to retire by 30th September 2011 could be inadvertently disadvantaged or impacted unfairly by the changes. BT describes this as a Pension Enhancement Window.

BT will be communicating this to all employees who are potentially affected by this (those who will be 50 or over on 30 September 2011) today and have also created a series of web pages to properly explain the changes.

Under the Enhancement Window, until 30 September 2011, anyone leaving BT and immediately taking their pension will be covered by the pre-1st July 2011 factors if that would be better for them.

There are no circumstances where the new factors would be better for anyone taking a Section A or B pension but there are circumstances where Section C members the new factors could be better. In those cases, the most beneficial factors will be used.

The Enhancement window will also apply to anyone leaving BT as part of a paid leaver arrangement until 30^th September, provided that they take their pension immediately. Also anyone who has taken their pension on the 1^st July or thereafter will have their pension reviewed to see if the Enhancement would be beneficial.

For Section A and B members and some Section C members, the use of the old pre-1 July 2011 factors can generate a significantly increased pension and lump sum, compared to what would be available after this date. It is impossible for us to be specific about the value of this enhancement – every individual case will be different – but this does represent a significant potential benefit to individuals. Consequently, members are encouraged to look at this issue very carefully and consider seeking independent financial advice.

It is important to stress that this Enhancement will only apply where individuals both leave BT and immediately put their pension into payment. We have argued to BT that it would be fairer for the company to extend this to other categories of membership including those who wish to put their pension into payment but continue to work for BT. The Company is considering this but, at least for now, the enhancement will apply only to those who both leave and put their pension into payment.

Individuals are normally asked to give three months’ notice of any intention to retire in order to be sure that their pension would be set up in time for their retirement. However, we have been assured that provided individuals give at least one months’ notice, their pensions and lump sum should be payable on time. Applications can be made up until midnight on 30^th September, though late applications will mean some delay in the payment of pensions. We would advise members to give as much notice as possible to the company and the pensions administrators of any intention to take advantage of this enhancement.

Copies of the BT announcements and FAQs are attached for information.

Members who have enquires on this issue must contact the Accenture Helpline in the first instance. The Helpline can be contacted on 0800 731 4747 or email: peopleline.pensions@accenture.com

Yours sincerely,

Nigel Cotgrove

Assistant Secretary