Defined Benefit Pension Transfer

BT Pension Scheme (BTPS)

Do you have an old BT Pension Scheme you are thinking about transferring into a more flexible arrangement?

Below is a general overview of what the scheme benefits are, these might vary from member to member, depending on what category you belonged to.

If you would like to find out if transferring your pension is suitable for you, why not get started today and receive your free Pension Transfer Guide and arrange a free initial consultation.

BT Pension Scheme (BTPS)

Disclaimer

The information we provide here is our understanding of the pension scheme and may not be the latest, there may also be some detail missing. It is provided in good faith as an overview of the details we hold. There has not been any endorsement or otherwise of these details by the pension scheme, their sponsoring employer or scheme administrators.

This is a partial summary of the complex benefits provided through potentially many schemes, where retirement options can be very different within the same scheme or the same individual sections of those schemes.

If you are either a current or deferred member of the pension scheme and wish specific information about your personal benefits, the scheme administrator will need to be contacted.

Overview

Administrator: BT Pension Scheme.

Website: https://www.btps.co.uk/

Scheme Retirement Age:

Section A at age 60, Section B & C age 65, with some section Bs able to take unreduced benefits from age 60 with benefits accrued prior to 1st April 2009.

Are partial transfers allowed?

If you built up benefits working at BT both before and after 1 April 2009, you may be eligible for a partial transfer. This would mean transferring out just the benefits you built up after 31 March 2009. The benefits you built up before 1 April 2009 would then remain with BTPS for you to use towards your retirement.

If you are eligible for a partial transfer, your Transfer Out Quote will show you a partial transfer value. There will also be a box for you to tick on your Transfer Acceptance form to indicate whether you wish to make a partial transfer.

You still need to be sure that any new scheme is able to meet your needs as effectively as the valuable, lifelong benefits you’ve built up with BTPS. If your partial transfer value is more than £30,000 you must speak to an IFA and make sure that the required forms are completed.

Scheme Funding Position:

The funding deficit at 30 June 2020 is £7.98bn, broadly in line with the projected position from 30 June 2017, when the deficit was £11.3bn.

The next triennial valuation date is June 2023.

Revaluation:

For any pension that’s more than the Guaranteed Minimum Pension (including Temporary Supplementary Pensions where applicable), increases are applied annually.

For benefits in deferment, statutory revaluation is applied (with a cap of 5% for benefits built up from 1 April 2009).

For benefits in payment, increases are applied on 1 April.

Escalation:

Pensions in payment can vary between RPI and CPI.

Flexible Options

When you retire you may be able to give up the increases on pension built up before 6 April 1997 that is more than the Guaranteed Minimum Pension.

This is known as Pension Increase Exchange and would mean a higher starting pension, but a portion of your pension wouldn’t be eligible for future increases.

Any resulting spouse’s pension benefits are based on the member’s pension before any exchange of pension for a tax-free lump sum.

Death in Deferment

Section A: If you have a deferred pension and die before Normal Pension Age, your Spouse/Civil partner or Nominated Dependant and any eligible children will receive an amount equal to one year’s pension at the rate that would have been payable if you had retired at the date of death, except that there will be no enhancement of Pensionable Service.

In addition, a preserved lump sum death benefit would be payable, revalued since the date you left service.

If there is no Spouse or Civil partner, a Nominated Dependant may be considered for a pension at the discretion of the Trustee.

Section B: If you have a deferred pension and die before Normal Pension Age, your Spouse/Civil partner and any eligible children will receive pensions similar to those that would have been payable if you had died in service, except that there will be no enhancement of Pensionable Service.

In addition, a lump sum death benefit would be payable equal to the higher of:

  • 1 1/4 of Final Pensionable Salary;
  • The retirement lump sum which would have been paid if you had been retired on medical grounds at the date of your death;
  • 5 times your deferred annual pension; or
  • A refund of your member contributions (excluding any contributions attributable to pensions for your Spouse/Civil partner or eligible children) with interest at 3% per year compound.

If there is no Spouse/Civil partner, a Nominated Dependant may be considered for a pension, at the discretion of the Trustee.

Section C: If you have a deferred pension and die before Normal Pension Age, your Spouse or Civil partner and any eligible children will receive pensions similar to those that would have been payable if you had died in service, except that there will be no enhancement of Pensionable Service.

If there is no Spouse or Civil partner, a Nominated Dependant may be considered for a pension, at the discretion of the Trustee.

Death in Retirement

Section A: If you die within five years of your pension starting, the Trustee will pay a lump sum equal to the difference (if any) between five times your annual pension on the date you died and the total pension and lump sum payments you have already received. This is currently paid free of inheritance tax.

In addition, if you leave a Spouse/Civil partner, he or she will be entitled to a pension. Alternatively, the Trustee may, at its absolute discretion, pay a pension to your Nominated Dependant.

A pension payable to a Spouse/Civil partner or Nominated Dependant is usually one half of your pension. It may be less if you have not made contributions to increase those benefits in respect of service before 1 June 1972. A Spouse’s/Civil partner’s or Nominated Dependant’s pension will be payable for life.

Section B: If you die within five years of your pension starting, the Trustee will pay a lump sum equal to the pension payments you would have received for the remainder of the five years at the rate payable immediately before your death.

This is currently paid free of inheritance tax. In addition, if you leave a Spouse/Civil partner, he or she will be entitled to a pension. Alternatively, the Trustee may, at its absolute discretion, pay a pension to your Nominated Dependant. A pension payable to a Spouse/Civil partner or Nominated Dependant is usually one half of your pension. It may be less if you have not made contributions to increase those benefits in respect of service before 1 June 1972.

A Spouse’s/Civil partner’s or Nominated Dependant’s pension will be payable for life. A member’s Spouse’s/Civil partner’s or Nominated Dependant’s pension built up after 5 April 2009 may be reduced from the Spouse’s or Civil partner’s State Pension offset age (normally the age at which the State Pension would be paid to the Spouse or Civil partner) by half the Member’s State Pension offset.

BT has a discretion not to apply this reduction.

Section C: If you die within five years of your pension starting, your Spouse or Civil partner will be entitled to a pension equal to the pension you were receiving before your death, for the remainder of the five years.

Alternatively, the Trustee may, at its absolute discretion, pay a pension to your Nominated Dependant (see “Payment of benefits” section of this booklet). At the end of the five years your Spouse/Civil partner or Nominated Dependant where applicable, will be entitled to a pension equal to one half of the pension you would have received had you not given up any of your pension for a lump sum.

A Spouse’s/Civil partner’s or Nominated Dependant’s pension will be payable for life. A member’s Spouse’s/Civil partner’s or Nominated Dependant’s pension built up after 5 April 2009 may be reduced from the Spouse’s or Civil partner’s State Pension offset age (normally the age at which the State Pension would be paid to the Spouse or Civil partner) by half the Member’s State Pension offset

BT has a discretion not to apply this reduction.

Transfer Timescales

The timescales below are based on the entire transfer process from the initial enquiry, through to advice, and eventual completion of the transfer, in months.

This information is based on our own scheme specific real-world data gathered over an 18 month period. To be clear and ensure there is no risk this information can be deemed misleading, it is our own data for the entire process, which includes our own very thorough and complex regulatory analysis and advice process, in addition to the gathering and provision of accurate information from the scheme administrators and their subsequent completion of any pension fund transfer requests. Future timescales could vary.

Fastest: 3.7

Slowest: 16.3

Average: 8.0

Need BT Pension Transfer Advice?

If you are a member of the BT Pension Scheme and would like to know if transferring or cashing in your pension at 55+ is suitable for you, why not get started today and receive your free Pension Transfer Guide and arrange a free consultation.

Grove Pension Solutions Ltd is regulated by the Financial Conduct Authority and specialise solely in defined benefit pension transfer.

Pension Transfer Consultation

Get Started Today

Free Pension Transfer Guide & Consultation
If you would like to find out if transferring your pension or taking a cash lump sum is suitable for you, we can provide a free initial Pension Transfer Consultation known as abridged advice.

Simply complete your details below, and we will send you our Pension Transfer Consultation Pack and Enquiry Form.

As part of the consultation we will look at:

  • What existing pension plans you have in place.
  • What your plans are for retirement.
  • Your needs for flexibility and control.
  • The likely cost of more in-depth advice.

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Defined Benefit Pension Transfer Warning

Transferring away from a defined benefit pension scheme means you will lose valuable guarantees.

Taking benefits early will almost certainly reduce your pension income in retirement and is only suitable for a limited number of people and circumstances. This should not be seen as an easy option for raising cash.

If you release all your money from your pension early you will not have anything left to provide you with income in retirement.

When releasing cash from your pension, usually up to 25% is tax free, the balance is taxed at your marginal rate at the time and could change in the future.

Watch the FCA video explaining the expectations of financial advisers when advising you on defined benefit pension transfers.

Grove Pension Solutions Ltd is authorised and regulated by the Financial Conduct Authority (Reference number 465051).

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