Just when Theresa May thought life couldn’t get any more complicated, a trade union has warned of potential strike action against corporate giant British Telecom (BT). But it feels like we’ve been here before, as the row between the workers and the bosses is very similar to one with another multinational company.
Is it good to talk?
The Communication Workers Union (CWU) is in deadlock with BT over pensions. On Tuesday 14 November, BT announced a 60-day consultation on changes to its company-defined benefit pension scheme and the Retirement Saving Scheme; a move which prompted an angry response from the CWU, which has been in negotiations with BT over these changes since the summer.
And the union did not mess around, warning that, if the scheme was closed from April 2018 (as BT has proposed), it “would automatically trigger an automatic industrial action ballot”. It added that, unless an agreement was reached, a “major industrial relations showdown” looked “inevitable”.
In a move similar to that of Royal Mail Group, which prompted an overwhelming vote by CWU members to strike, BT is thinking of closing its company-defined benefit pension scheme. As The Telegraph reported, the scheme is the biggest private pension plan in the UK, worth £57bn. But BT says it is unaffordable because it faces a black hole of up to £14bn which the company is not willing to make up.
More for less
So BT is proposing to either close the scheme entirely or make changes to it. But the CWU has called both options “unacceptable”, saying any changes would mean a 4% increase in member contributions, along with a 12.5% reduction [pdf, p2] in yearly accruals, meaning:
a triple whammy of significantly reduced benefit build up rate the scrapping of the specific additional lump sum for service after April 2018 and permanent highly detrimental caps on both pensionable pay increases and future increases for pensions in payment…
The CWU says this would mean:
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in practice that… members would have to pay a whole load more for considerably less.
We’ve been here before
This dispute echoes the one the CWU is currently engaged in with Royal Mail. It wants to end the defined benefit pension scheme, which currently gives staff a fixed yearly payment when they retire, based on their average wage. It also wants to shift workers onto a defined contribution scheme, which guarantees that workers get what they paid in when they retire; but which links any extra money to investment performance.
But the CWU’s row with Royal Mail has been bitter, with the company getting a court ruling to stop a proposed strike. The two parties are currently back around the negotiating table, with industrial action still on the cards.
With BT, though, the CWU is also objecting to changes to the Retirement Saving Scheme. BT is currently offering a 1% increase in what it puts into the scheme. But the CWU says [pdf, p3] this is “not good enough”. It wants [pdf, p3] BT to put twice as much in as a member does. For example, if a person pays in 5% of their salary, BT would put in 10%. The CWU also wants the minimum amount BT put in, which has been fixed at £1,500 since 2010, increased [pdf, p3].
BT in a spot of bother
BT is not budging, though. A spokesperson told The Telegraph:
If we do nothing, BT will be facing hundreds of millions in extra contributions to the scheme, on top of our current costs. This would damage our ability to invest in the UK’s communications networks, customer experience and jobs.
But The Telegraph also hinted at a wider problem for BT. It said:
BT is attempting to reduce its pension bill as it faces pressure from the Government and regulators to invest in broadband upgrades and concern from shareholders over the affordability of its dividend…
A senior BT source said: ‘We have got the regulator and the Government to handle at the moment. We can’t afford a fight with the staff too’.
The union says…
And the CWU is probably well aware of this. Its Deputy General Secretary, Andy Kerr, said the:
Current proposals… are nothing less than a slap in the face for loyal employees and must be challenged with a totally united front.
BT talks about ‘fairness’, but some senior management get a contribution to their pensions of up to 30% of salary – far in excess of any CWU member – further highlighting the total inadequacy of its paltry offering… and the unacceptability of the massive changes suggested for… members.
While the CWU accepts that there is a case for some change… we won’t be fobbed off by proposals which represent the short-changing of all of our members.
A worrying trend
From the government’s point of view, industrial action is the last thing May needs, on top of chaotic Brexit negotiations, the furore over Universal Credit, and a Cabinet falling apart at the seams. But the CWU dispute with both BT and the Royal Mail points to a wider problem. With state pensions being systematically reduced, people are having to rely more and more on private pensions for security. And with huge corporations like BT already trying to save money on these for the sake of their shareholders, it sets a worrying tone for anyone thinking about their retirement.
– Support the CWU campaign against pension changes with the hashtag #TellBTNo.
– Join The Canary, so we can keep holding the powerful to account.
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