A higher pension–but at what price?

Former BT employees are the latest to get an offer from their former employer of a higher BT Logo Flickr psdpension.

Similar offers have previously been made by Boots and ITV. Of course there’s a catch. The company is offering a higher fixed pension that will never increase in future, whereas its normal pension rises in line with inflation.

For those in good health, the danger of taking the fixed pension is that they live into their nineties and that the rate of inflation rises – in that case the spending power of their income will shrink. On the other hand, for those in poor health who aren’t likely to live long, a higher income now could represent a very good deal.

If you get such an offer, ask our advice, as there are often wrinkles (for example in relation to spouse’s pension rights) that could be very important.

Steve Clark

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