BBC blames £2bn black hole as it slashes pension scheme benefits

The BBC yesterday became one of the first quasi-public sector bodies to take the axe to its final salary pension scheme, blaming a £2bn funding black hole. The final salary scheme will be closed to new staff from this December while existing staff will see their benefits sharply reduced.

The corporation said that from April next year, pensionable pay will increase at only 1 per cent a year – regardless of the size of any future pay award. However, staff who opt to voluntarily move into the new "money purchase" pension – where the benefits depend on investment returns, will get a better deal from the funds that they have already built up in the final salary scheme.

According to the corporation's staff handbook: "If you choose to remain in the scheme for future service, benefits built up before 1 April 2011 will continue to increase to your retirement (or when you leave the BBC) in line with annual salary increases, limited to 1 per cent each year.

"If you choose to join the DC (defined contribution) plan for future service you will become a 'deferred member' of the scheme and stop building up benefits in the scheme. The benefits you have built up will increase broadly in line with inflation to your retirement."

The corporation claimed the shake-up was designed to ensure its pension scheme "remains sustainable, flexible and affordable for the future". The deficit stood at just £470m in 2008 compared to the £2bn shown by the 2009 valuation.

Zarin Patel, the BBC's finance director, said yesterday: "This has not been a sudden decision. When changes were made to the scheme in 2006, we made it clear we would need to review the scheme's performance. Our original aim of reviewing it in 2013 has had to be brought forward because of the impact of market performance and growing life expectancy.

"We have spent over 18 months working to find the best solution for our staff. For the next 90 days, the BBC will consult fully on these proposals with staff, the unions, musicians unions and Equity." She said the changes being introduced would be in the interests of both BBC staff and the licence fee payer.

But the move – likely to create an outcry among BBC staff – drew an angry response from unions. Gerry Morrissey, the general secretary of Bectu, said: "Bectu and our sister unions at the BBC have been campaigning in advance of the announcements for the pension schemes to remain open and we welcome the fact that current staff will continue to accrue benefits.

"However the restriction on future pensionable salary increases of 1 per cent will permanently break the link between an individual's salary and their final pension. In addition, the employment benefits package will not be as attractive to new employees and we believe that the BBC will struggle to attract staff with the appropriate skills levels, especially as the BBC will be recruiting a significant number of people for Salford from January 2011."

The BBC's decision could be seen as the test-bed for other public sector schemes, although unlike the BBC their pensions are often not funded. John Hutton, the former Labour minister, is preparing an independent review of public sector pensions for the Government. However, David Cameron has already warned public sector workers to expect less as the Government grapples with the hole in Britain's finances.

PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
tech

Company reveals $542m investment in start-up building 'a rocket ship for the mind"

News
Bourgogne wine maker Laboure-Roi vice president Thibault Garin (L) offers the company's 2013 Beaujolais Nouveau wine to the guest in the wine spa at the Hakone Yunessun spa resort facilities in Hakone town, Kanagawa prefecture, some 100-kilometre west of Tokyo
i100
Arts and Entertainment
James Blunt's debut album Back to Bedlam shot him to fame in 2004
music

Singer says the track was 'force-fed down people's throats'

Sport
CSKA Moscow celebrate after equalising with a late penalty
football

News
i100
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Helpdesk Analyst

£23000 per annum + pension and 22 days holiday: Ashdown Group: An established ...

Senior Helpdesk Analyst / Service Desk Co-ordinator

£27000 per annum + pension, 22 days holiday: Ashdown Group: An established ind...

Senior Pensions Administrator

£23000 - £26000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...

Corporate Actions Administrator / Operations Administrator

£25 - 30k: Guru Careers: A Corporate Actions Administrator / Operations Admini...

Day In a Page

Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
Let's talk about loss

We need to talk about loss

Secrecy and silence surround stillbirth
Will there be an all-female mission to Mars?

Will there be an all-female mission to Mars?

Women may be better suited to space travel than men are
Oscar Pistorius sentencing: The athlete's wealth and notoriety have provoked a long overdue debate on South African prisons

'They poured water on, then electrified me...'

If Oscar Pistorius is sent to jail, his experience will not be that of other inmates
James Wharton: The former Guard now fighting discrimination against gay soldiers

The former Guard now fighting discrimination against gay soldiers

Life after the Army has brought new battles for the LGBT activist James Wharton
Ebola in the US: Panic over the virus threatens to infect President Obama's midterms

Panic over Ebola threatens to infect the midterms

Just one person has died, yet November's elections may be affected by what Republicans call 'Obama's Katrina', says Rupert Cornwell
Premier League coaches join the RSC to swap the tricks of their trades

Darling, you were fabulous! But offside...

Premier League coaches are joining the RSC to learn acting skills, and in turn they will teach its actors to play football. Nick Clark finds out why
How to dress with authority: Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear

How to dress with authority

Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear
New book on Joy Division's Ian Curtis sheds new light on the life of the late singer

New book on Ian Curtis sheds fresh light on the life of the late singer

'Joy Division were making art... Ian was for real' says author Jon Savage
Sean Harris: A rare interview with British acting's secret weapon

Sean Harris: A rare interview with British acting's secret weapon

The Bafta-winner talks Hollywood, being branded a psycho, and how Barbra Streisand is his true inspiration
Tim Minchin, interview: The musician, comedian and world's favourite ginger is on scorching form

Tim Minchin interview

For a no-holds-barred comedian who is scathing about woolly thinking and oppressive religiosity, he is surprisingly gentle in person
Boris Johnson's boozing won't win the puritan vote

Boris's boozing won't win the puritan vote

Many of us Brits still disapprove of conspicuous consumption – it's the way we were raised, says DJ Taylor
Ash frontman Tim Wheeler reveals how he came to terms with his father's dementia

Tim Wheeler: Alzheimer's, memories and my dad

Wheeler's dad suffered from Alzheimer's for three years. When he died, there was only one way the Ash frontman knew how to respond: with a heartfelt solo album