Introduction to the Scheme

Section C Scheme Details

Benefits
Payment of your Scheme Benefits
Pension Increases
Transfer of Benefits
Other Information

Benefits

Normal Retirement
If you retire from your employment with the Company at Normal Retirement Age with
at least 2 years of Qualifying Service you will be entitled to an annual pension from the Scheme based on your Pensionable Service and Pensionable Scheme Salary

You will receive an annual pension from age 60 payable for life equal to:

1/60 x Pensionable Scheme Salary x Pensionable Service

Note: Pensionable Service is subject to a maximum of 40 years.

Optional Cash Lump Sum
If you wish, you may at retirement choose to exchange a part of your pension for a cash lump sum based on the full value of the amount of pension you have given up. Under current tax legislation, the payment will be tax free. The maximum Lump Sum will depend upon your service with the Company and your earnings but this will normally be:

3/80 x years of BT service x last year’s annual earnings*

*Note: For members who joined after 31 May 1989, the maximum earnings allowed will be restricted by the earnings ‘cap’ (£105,600 at April 2005).

Any conversion of pension to cash will reduce the amount of your future pension and pension increases, but not any widow, widower or dependant’s pension. However, your pension must be sufficient to cover the Guaranteed Minimum Pension under the Government’s requirements for contracting-out of SERPS.

Early Retirement
An actuarially reduced pension is available to deferred pensioners from the age of 50, irrespective of the reason for the cessation of scheme membership. The Trustee has discretion to pay a deferred pension in full at anytime in the case of ill-health or disability. The Trustee may also pay a pension early on compassionate grounds, but only if you are over age 50.

If you would like more information about any of the above circumstances please contact the pensions adminstrators, Accenture HR Services..

Death in Retirement

Widow, Widower or Adult Dependant’s Pension

In the first 5 Years of Retirement:
If you were to die within 5 years from the commencement of your pension, your Widow, Widower or Adult Dependant will receive a pension, equal to the pension received by you before your death, for the remainder of the 5 years.

After 5 Years of Retirement:
If you die after this first 5 year period, your Widow, Widower or Adult Dependant will receive a pension, equal to your pension, for 91 days after your death.

Immediately following the period of up to 5 years or 91 days, as the case may be, your Widow, Widower or Adult Dependant will then receive a pension equal to 1/2 of the pension received by you immediately before your death. If you had converted any part of your pension to a cash lump sum, such conversion will be ignored for this purpose. This Pension is payable for life, irrespective of any change in the payee’s circumstances.

Note: Under the Rules of the Scheme, if your Widow, Widower or Adult Dependant is more than 10 years younger than you, then the amount payable may, in exceptional circumstances (such, perhaps, as a very recent marriage with a large age discrepancy) be reduced at the Trustee's discretion. The maximum reduction is 2 1/2% for each year by which the difference in ages exceeds 10 years.

Children’s Pensions
If you die while in receipt of a pension and you leave a Dependent Child or Children (see definition), a pension will be payable for that child or those children. The amount of the pension will depend on the number of eligible children and whether there is a surviving Widow, Widower or Adult Dependant.

Death after leaving with Deferred Pension entitlement

If you leave the Scheme before Normal Retirement Age with entitlement to a deferred pension and you die before that pension becomes payable (normally at age 60), your dependants will receive the following:

Widow, Widower or Adult Dependant’s Pension
An immediate pension equal to 1/2 of the pension you would have received if the deferred pension had come into payment immediately before your death.

Note: Under the Rules of the Scheme, if your Widow, Widower or Adult Dependant is more than 10 years younger than you, then the amount payable may, in exceptional circumstances (such, perhaps, as a very recent marriage with a large age discrepancy) be reduced at the Trustee's discretion. The maximum reduction is 2 1/2% for each year by which the difference in ages exceeds 10 years.

Where you do not have dependants at the date of your death before your pensions becomes payable, there will be no payment due from the Scheme.

Children’s Pensions
If there is a surviving Widow, Widower or Adult Dependant and one Dependent Child, an immediate pension equal to 1/2 of the Widow, Widower or Adult Dependant’s pension will be payable in respect of that child.

If there is a surviving Widow, Widower or Adult Dependant and more than one Dependent. Child, an immediate pension equal to the Widow, Widower or Adult Dependant’s pension will be payable in respect of those children. If there is no surviving Widow, Widower or Adult Dependant then the pension in respect of the Dependent Child or Children above will be doubled.

Note: If you die before your pension becomes payable and you do not have any dependants, there will be no payment due from the BTPS.

Death - General

Adult Dependant's Pension
If you are not married you may be able to nominate an adult who is financially dependent on you, and is likely to continue to be so, to receive the pension that would have been payable to your Widow or Widower. Payment is at the discretion of The Trustee. Such a nomination will remain in force until it is revoked in writing or until you become married.

An explanatory leaflet and nomination form is available here.

Surrender of Part Pension
If you are medically fit you may, within six months before your pension becomes payable, surrender part of your pension to provide extra pension for either: your Widow, Widower or one dependant after your death. If you feel that you would like more information about this option please ask the pensions adminstrators, Accenture HR Services for details during the six months prior to your pension becoming payable.
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Payment of your scheme benefits

Your BT Pension
Your pension and any Widow, Widower, Adult Dependant or Child(ren)’s pension(s) will be paid in arrears in monthly instalments, just like your pay. Pension payments are also treated as earned income for tax purposes and tax is deducted before payment by the Scheme.

Death Benefit
A lump sum death benefit paid under Section C of the Scheme will not normally attract a liability for inheritance tax as the payment is made at the discretion of the Trustee.

Within the Trust Deed of the Scheme, there is a list of persons to whom the Trustee can pay the lump sum benefit. They include widow, widower, children and dependants. You can however inform the Trustee that you wish to nominate other persons or organisations by completing an Expression of Wish form. Any payment will always remain at the discretion of the Trustee.

An explanatory leaflet and Expression of Wish form is available on request or via access to the BT Human Resource Intranet site.
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Pension Increases

Pensions in payment are reviewed and increased in April each year at a rate of 5% per annum, or, if less, the increase in the cost of living as measured by the Retail Prices Index (RPI). In addition, at the request of the Company, the Trustee may provide discretionary increases in excess of the amount promised under the Rules.

The part of your Scheme pension which is equivalent to the Guaranteed Minimum Pension element will be increased in line with the Government’s statutory orders. Any increase on the GMP earned before 6 April 1988 will be paid by the State along with the basic State pension and any increase up to 3% per annum earned on and after that date will be paid by the Scheme with any balance of such increase being paid by the State. During the first year the pension starts to be paid, a proportion of the full annual increase will be awarded.

Deferred pensions in excess of the GMP will be increased annually until brought into payment by 5% or, if less, the increase in the RPI. Thereafter they will increase in line with other Section C pensions in payment. GMPs are revalued separately in line with Government orders.
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Transfer of Benefits

If you were a member of another pension scheme before you joined the Scheme and you have pension benefits preserved in that scheme, then you may be able to transfer the value of those benefits into the Scheme. You should advise Accenture HR Services of your interest in a transfer to the Scheme as soon as possible after joining the Company.

A transfer takes the form of a payment from your previous scheme to the BT Pension Scheme which is converted into a period of Pensionable Service in the BT Pension Scheme. A transfer is accepted at the discretion of the Trustees.

For further information please contact Accenture HR Services. Contact details are to be found in Who’s Who.

Other information

State Pensions

The State Basic Scheme
The State provides a basic flat rate pension at State Pension Age (SPA). The SPA for men is 65. The SPA for women has been altered to 65 for women born after 6 April 1955. A sliding scale applies for women born between 6 April 1950 and 5 April 1955. The SPA for women born before 6 April 1950 continues to be 60.

Married women who have only ever paid National Insurance contributions at a reduced rate are not eligible for their own State pension.

Membership of the BT Pension Scheme does not affect your entitlement to the basic flat rate State pension.

Additional State Pension
Whilst you were an active member of the BT Pension Scheme you were contracted-out of the second tier State pension provision and paid lower rate National insurance contributions as a result.

In relation to the part of Pensionable Service built up before 6th April 1997:
• Your pension from the Scheme will never be less than the pension you would have earned had you remained in the State Earnings Related Pension Scheme (SERPS). This is known as your Guaranteed Minimum Pension or GMP.

• On your death, your Widow, Widower or Adult Dependant will receive a pension which is at least half your own GMP.

In relation to the part of Pensionable Service built up after 5th April 1997:
The Scheme’s Actuary has to certify that the Scheme provides a certain minimum level of benefit. In practice, in almost all circumstances, the benefits provided by the Scheme will be significantly better than would otherwise have been expected under SERPS (to 05/04/1997) and the Second State Pension (from 06/02/2002).

The GMP must always be paid as a pension and therefore this may restrict the amount of the tax-free cash sum that you may wish to take from the Scheme at retirement.

Use of Benefits as Security, etc
You are not allowed by law to make use of or assign your Scheme benefits (present or future) as security or collateral for any mortgage, loan or debt. Any attempt to do so could result in the benefits ceasing to be payable.

Disputes
As required by the Pensions Act 1995, the Scheme has an internal procedure for resolving any disputes which may arise. This is a two stage process. In the first instance you must address your complaint to the following address for referral to the Secretary to the Trustee of the Scheme:

The Technical Services Manager
Accenture HR Services
Venture House
Venture Way
Chesterfield
S41 8NR

In normal circumstances you will receive a full response within 2 months. If you are dissatisfied with this response you will be entitled to refer the matter to the Trustees within 6 months of receiving it. The Trustees will then reply directly to you, where possible within 2 months.

Hopefully, any dispute will be resolved by the Secretary to the Trustees or the Trustees themselves. However, you can also approach The Pensions Advisory Service (TPAS) details of which are given below.

The Pensions Advisory Service
11 Belgrave Road
London
SW1V 1RB

This service is available to help members and beneficiaries of occupational pension schemes resolve difficulties with Trustees or Administrators. Should TPAS be unable to resolve any difficulties, the Pensions Ombudsman has the power to investigate and settle complaints of mal-administration and disputes of fact or law relating to occupational pension schemes. The Ombudsman can be contacted at the same address as TPAS.