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BBC takes axe to pensions in bid to plug £2bn deficit
Alistair Foster, Showbusiness Correspondent29 Jun 2010
The BBC was facing revolt from thousands of staff today after taking an axe to its final-salary pension scheme.
Many staff will be worse off in retirement under the proposals as the corporation looks to counteract a £2 billion deficit in its pension fund.
The plans would see the terms of the BBC's final-salary scheme, which closed to newcomers in 2006, radically changed so the pensionable salary of staff will in the future rise by no more than one per cent a year.
The rise will be capped at this amount even if the employee gets a substantial pay rise, nor will it be protected against inflation.
There are 18,000 staff who are still contributing to the scheme who would be affected. A recent review of the pension fund revealed it had ballooned from £470 million in 2008 to £2 billion this year.
The BBC's business editor Robert Peston wrote a lengthy blog this morning warning that the broadcaster is facing a “massive outcry” among staff.
Mr Peston said: “If an employee is promoted and receives a 10 per cent increase in salary, that won't generate a 10 per cent increase in pension, as it would have done in the past: it'll only generate a one per cent increase.
“For those relatively early in their careers at the BBC, who expect their salaries to rise sharply, the impact will be so great that they would probably be bonkers to make any future contributions to the scheme.”
The BBC will launch a 90-day consultation with staff and trade unions. Gerry Morrissey, BECTU general secretary, said: “BECTU and our sister unions 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 one per cent will permanently break the link between an individual's salary and their final pension.”
Zarin Patel, the BBC's chief financial officer, defended the proposals.
“This has not been a sudden decision. 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. I believe the solutions we have proposed today will deliver a pension scheme that is sustainable, affordable and flexible for BBC staff and the licence fee payer,” she said.
How staff will feel the pinch
The BBC is not closing its final salary pension scheme entirely but it is limiting the amount by which future pensions increase in line with salary to just one per cent a year.
This means that an employee currently on a salary of £30,000 retiring in 10 years time will have the “final salary” on which their pension will be based capped at around £33,000 (a one per cent rise every year for 10 years). If they work for 40 years that means a pension of £24,200.
Under the old scheme if their actual final salary had gone up to £40,000 their pension would have been £26,600.
Reader views (31)
I can assure writers here that certainly, in my case, the BBC Pension was contributory.I joined the BBC in 1955 and had to pay 7.5% of my salary for 35 years in order to get a full pension.The BBC also contributed.
- Peter, Watford UK, 29/06/2010 23:14
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Oh wahat a shame for them...
I am glad the BBC is being realistic in regard to the workers and not in regard to the so called 'talent'. These are massively overpaid - weather girls on £100000 a year. Their licence fee money should be capped to the level ITV can pull in with adverts so that both organisations compete fairly. The numbers of BBC staff who went to Glastonbry was rediculous.
get rid of BBC1 and concentrate on stuff that ITV will not do. Make Alan Hansan pay his own taxi fairs and as for Jeremy Paxman, may he no longer stuff us for over a million quid a year. (Don't mention stuffing to me and talk about Jonathon Ross)
- Graim, London, 29/06/2010 17:55
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BBC = Private sector commercial competitive pay with public sector gold plated pensions.
The BBC should consider itself one or the other:
If it thinks it should pay people competitive commercial rates then it should lose the enforced TV-tax;
If it is a public body then it should not be trying to compete on private commercial pay scales.
- Frank, Home Counties, England., 29/06/2010 17:48
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Good start but not enough. The absurd top wages need trimming toward the norm for UK incomes. No one is so talanted that they deserve more than x5 the average.
The pension aparheid must stop.
Most public sector workers do not realise the hidden
perks they enjoy on the the back of private sector taxpayers. As one of those in self employment I contribute to their well being whilst receiving, no sick pay, no holiday entitelment, no employers contribution to a pension and not a chance of a final salary scheme. In the UK some workers are at present more equal than others. Time for rebalancing.
The Irish public sector have set a good example by accepting necessary pay cuts without strikes. If there is dissent here in the UK it would easily be crushed if public sector jobs were re-advertised at a lower salary and everyone a fair and equal chance at to board the gravy train based on their capabilities.
- Paul, Edinburgh, 29/06/2010 16:39
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Dumbed down BBC, the comic cuts of broadcasting, should slash the salaries of its executives and presenters. It has the childish mentality that if it talks about cuts, it should show someone cutting the lawn, just incase you do not know what a cut is. Why do they read the weather report, then five minutes latter give you the same weather report for your region. Why have two people to read the news? Why have four to comment at half time on a football match. Why have expensive Americans to comment on Wimbledon. Why have commentators at all at sports matches. Has not the BBC grasped the fact that television is not radio. We can see the match. You do not go to a football match to watch, then bring a friend to tell you ball by ball what is going on. The BBC lives, like the rest of Britain in the thirties.
If any one wonders why Britain is so badly educated they should watch the BBC's children's programs, or some of its soaps.
- ALAN., ENGLAND, 29/06/2010 15:17
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About bloody time; review salaries while you are it.
I tell you what, go the full hog and employ people for their skills/experience/ability, not just for specific aspects of their genetic make up.
- Frank, Home Counties, England., 29/06/2010 14:30
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Preston thinks he is the Queen Mother of broadcasting!
Message to all of you BBC staff: We license fee payers fund you and your salaries and if you don't like it then RESIGN AND GET A JOB ELSEWHERE!
- James from Camden - The Simple Plain Truth, London, 29/06/2010 14:17
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Cheers, MickinLondon, one-eyed Gordon already just about abolished my private pension anyway!
- Paul, London,
Think nothing of it, Paul.
And look on the bright side, you will get free care in an old peoples home, if you are skint.
- mickinlondon, london, 29/06/2010 14:03
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Cheers, MickinLondon, one-eyed Gordon already just about abolished my private pension anyway!
- Paul, London, 29/06/2010 13:46
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Public sector employees, including those in the bbc, should be out in the same pension situation as those in the private sector. Welscome to a bit of reality; this is only the start for you!
- Jules_london, london, 29/06/2010 13:45
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Britain had final salary schemes which were said to be the best in Europe when Labour were elected in 1997. Chancellor Brown decided to raid pension funds to the tune of £5 billion a year.(he was advised against this but went ahead).The BBC final salary pension fund is the latest to fail thanks to Brown's incompetence.
- Peter, Watford UK, 29/06/2010 13:42
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Why don't the Tories Privatize BBC? They did everything else, and it worked so well.
- Frederick, London, 29/06/2010 13:39
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Peter, London
Couldn't agree more.
- Doug, Barnet, 29/06/2010 13:22
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It's not clear from the article but are the BBC getting this pension as a non-cvontributory scheme or do they have to contribute towards it.
If it's currently non-contributory perhaps they should be given the option to keep the scheme but have to contribute to their pensions like most other people now have to.
- JL, London, 29/06/2010 13:13
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It took 18mths to reach this decision? Shameful!
No wonder the Tories wants us to work until we drop! With these types of pension’s contributions…hopefully it will take 90 days to see sense!
- James, London, 29/06/2010 13:08
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"mr b, you are an idiot!" - that should be the headline on tonight's 6 o'clcok news... anyone who thinks that reporting on a event is the catalyst for the event is the kind of simpleton that should stay glued to ITV.
- marino, london, 29/06/2010 13:01
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Yup, that's how it is in the real world. I have personal experience of suffering from a black hole in my companies pension fund.
Now here's a thought. If certain BBC employees were not so overtly supportive of Gordon Brown & NuLabor we might have got rid of him much sooner and done less damage to the economy.
What goes around comes around!
- Mark Myword, London, 29/06/2010 13:00
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Not only are BBC pensions far too high their pay is far too high as well.
Why do they have a pair of newsreaders almost permanently on show when 'Sky' makes do with one?
They are grossly overstaffed in most departments.
Who (daft rhetorical question) funds those expensive overseas jaunts on 'Blue Peter'
I was quite staggered to see that a female newsreader got £92,000 pa. This was forced out of her by a Labour Peer (Lord Fowkes) who was being quizzed about House of Lords expenses - Pot calling the Kettle black.
BBC should get its act in shape, produce decent programmes instead of the trash they do today and slash their expenses.
- Anglo, Sussex England, 29/06/2010 12:52
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MickinLondon
Stalins' dead mate!
- Tojo, Hythe Kent
That is my point, Tojo; he was rich and powerful; and had a gold plated state pension; but he died anyway.
- mickinlondon, london, 29/06/2010 12:50
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The BBC is a good reason for feeling proud to be British - it has high standards and excellent progranmmes and anyone who has lived abroad knows that it is respected worldwide. But our country is in desperate debt and BBC staff must realize that the days of huge, subsidized pensions are over. I hope the BBC staff involved will react responsibly to the cuts and come to terms with the new economic reality.
- Andrew, London, 29/06/2010 12:48
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"For the next 90 days,the BBC will consult fully on these proposals".Ha Ha Ha they will consult and ignore what they don't want to hear thats what consultation means to many organisations.
- Mike Melbourne, Bedford, 29/06/2010 12:47
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Is this legal? How can the terms be changed once the contract has been entered into?
- In Mourning for our Nation, Tottenham, 29/06/2010 12:44
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Now Robert Peston and the rest of the BBC news 'over-exaggeration' business/economic department, what goes around....
You drummed us into a frenzy, a couple of years back, crying "recession" at every turn till we all believe it and it happened, now you're reaping the benefits... couldn't have happened to a nicer lot. Next time try a bit of positivity, honesty and less sensationalism to sell/justify your news space!
- Mr B, London, 29/06/2010 12:41
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MickinLondon
Stalins' dead mate!
- Tojo, Hythe Kent, 29/06/2010 12:33
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Hi Robert, welcome to the real world.
Now you know how the rest of us feel.
- PJ, Reading, UK, 29/06/2010 12:26
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Oh dear, poor littles loves.
Join the real world where the rest of us have to pay for our pensions and not have it paid for by the tax that masquerades as the "licence fee".
Zero sympathy for these champagne socialists.
- James, London, 29/06/2010 12:24
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BBC may have problems recruiting qualified staff for Salford; by all accounts this Region has been badly hit by the recession and requires careful Employers. Of course during the Olympics whole departments have already transferred from London to Salford and staff will return to work and be fêted with accommodation for the duration. Nice work if you can get it.
- Bill, Worthing Sussex, 29/06/2010 12:11
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All private pensions should be abolished, and everyone should have only the State Pension to live on.
All private pension fee's should be paid to the State; then equalled out to all pensioners, this would save millions in pension costs etc.
After all. a rich man only needs the same amount of food, clothing, and housing, as a poor man does.
- mickinlondon, london, 29/06/2010 12:07
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The BBC and all public sector workers should not be immune or protected from the financial realities of the outside world. If they demand commercial rates of pay then other commercial realities should apply too.
The only exception to this in my view would be nurses and teachers whom we should value and look to attract talented workers into the profession.
The TV profession unfortunately does not equate to health and education.
- Peter, London, 29/06/2010 11:40
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So finally, and long overdue, the BBC luvvies have to join the real world in which the rest of us live. Good.
Their whining does nothing other than convince me that the entire anachronistic and wildly biased BBC edifice should be dismantled and sold off.
- Matt, London, UK, 29/06/2010 11:38
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Oh dear, the BBC staff will now have to save part of their bloated salaries towards their pensions, instead of relying on the licence payer to fund their retirement?
Welcome to the real world chaps!
- Huggy, Cumbernauld Scotland, 29/06/2010 11:36
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