BBC offers deal amid pensions strike threat

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The Independent Online

The BBC offered a new concession today to members of its pension who are planning to strike over proposed changes to the scheme.

The broadcaster has offered to set up a new career average scheme for workers who belong to its defined benefit pension, who are concerned that the planned changes will reduce the value of their retirement income.

The BBC announced plans to overhaul its defined benefit schemes in June after discovering the deficit had ballooned from £470 million in 2008 to about £2 billion.

It gave existing members of the scheme the choice of either staying in it but having any salary increases used in pension calculations capped at 1% a year, or leaving the scheme and joining a new defined contribution one.

But members of the National Union of Journalists and the technicians' union Bectu voted to strike by more than 9-1 in protest at the "punitive" changes the group planned to make to the scheme.

The BBC said today that it had listened to members who had expressed serious concerns about the 1% cap on pensionable pay rises, and it was offering to set up a new career average pension for them.

The benefits paid out by the new scheme would be lower than those paid out by a final salary one, as workers' pensions would be based on their average earnings while they were a member of it, rather than their pay immediately before they retire.

But there will be no cap on the level of people's pay that will be used in the calculations, meaning any pay rises or promotions would be reflected in their pension.

People would accrue benefits at the rate of one sixtieth of their salary each year, the same as under the current system, while pensions in payment would rise each year in line with the lower of Consumer Price Inflation or 2.5%.

The BBC closed its final salary pension scheme to new members in 2006, when it introduced a career average scheme. The schemes have around 23,000 members of whom 17,000 are still contributing.

Workers who opt for the new career average scheme, which will be known as CAB 2011, will be asked to contribute 7% of their pay - considerably higher than the 4% members of the current career average scheme pay, but lower than the 7.5% paid by members of the final salary scheme.

In an email to members Mark Thompson, director-general of the BBC, said: "Pension reform at the BBC is inevitable.

"We have a large current deficit in our scheme and face long term pressures which, without action now, would undermine the scheme and compromise the broader finances of the BBC."

He added that while CAB 2011 was not a "panacea", it did go a "significant way" to addressing the concerns expressed during the consultation.

The consultation on the changes to the scheme had been due to finish at the end of this month, but the BBC has now extended it until the middle of November.