BT pension scheme option: should I opt to take a higher rate now?

BT is offering me a higher pension now in return for lower increases in future. How do I get the best advice on what to do?

I am a pensioner and my former employer, BT, has offered me a higher pension in exchange for receiving lower pension increases in the future. I have never heard of such a scheme. Is this normal?

BT has offered the services of a helpline run by independent financial advisers (IFAs) before I make a decision, but I would prefer the advice of someone I am comfortable with. Can you suggest a course of action? BS, Derry, Northern Ireland

Since April 2009, retiring BT pension scheme members have been able to opt to receive a higher starting pension, by giving up some of their future pension increases. BT says it is now extending this voluntary option to existing pensioners, giving them more choice and flexibility.

You, and other members, will get detailed information on the option and how it would apply to you but, says BT, you will also need to speak to a freephone helpline staffed by IFAs before taking the option. It is right to steer you in the direction of an IFA (either the ones it pays for on its helpline or your own) as the decision is far from straightforward.

Nick Bamford, an IFA at Informed Choice, says you would need to take into account your future view on inflation (would you rather take, say £100 now with a guarantee your pension will rise in line with the RPI or would you prefer to have, say, £105 now and gamble on future rates of inflation?). You would also need to consider your financial situation (do you need more money now or are you likely to need a higher amount later?) and your views on your life expectancy. As you subsequently told us your life expectancy and provision for your wife is your major concern as you have inoperable prostate cancer, we suggested you take more general advice about your financial situation. You can find an independent financial adviser in your area via

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