Storm over BBC pension changes

BECTU is challenging BBC plans to cut pension rights of redundant staff.

The union has been given notice that the Corporation is to end a special formula which enhances pensions of staff who end employment early because of redundancy.

Staff over 50 years old who are compulsorily retired currently receive a 20% uplift in pension, while redundant staff aged between 40 and 44 are also given special treatment.

Management have said that the formula, which is subject to periodic review, will not be continued beyond March 2002. Staff made redundant after that date will qualify for normal pension treatment, leaving them significantly worse off in retirement.

For staff retiring over the age of 50, the change takes effect on April 1 2002. Staff aged from 40-44 with more than 10 years' service who are given notice of redundancy on or before March 30 2002 will have pensions calculated on the special formula, even if their actual leaving date is later.

According to the BBC the change was "not made lightly", and is thought by the union to be a consequence of a fall in share prices cutting the value of the BBC Pension Fund.

The special formula was introduced in the mid-80s as a means to soften the blow of redundancy for staff caught up in the massive job cuts pushed through by then DG John Birt.

His successor, Greg Dyke, has claimed to have changed the culture of redundancy at the BBC, by insisting that job cuts do not go ahead without approval of senior management.

However, his "One BBC" reorganisation, which is intended to cut overheads from 24% to 16% over three years, has led to as many as 1,000 post closures in the last year. Most recently, the BBC's Factual and Learning Division announced 126 job cuts, many of them among documentary programme-makers.

Renewal of the special pensions formula was part of the joint union pay claim for 2002, which was submitted last month.

BECTU has called for a meeting with BBC management to discuss the planned changes, which are likely to stiffen resistance to redundancies in future rounds of job cuts.

Letter from BBC management notifying an end to special pensions formula.
Published with permission from the BBC

2nd November 2001

Dear Luke [Crawley]


I am writing to inform the trade unions that the BBC's Executive Committee has been considering the discretionary pension benefit arrangements which are currently in place. As you will appreciate, the long term viability of the Pension Fund requires us to manage the cost to the BBC, making prudent use of any Pension Surplus.

Compared to other organisations, particularly generous benefits are provided to those employees retiring early. In recent years, in addition to the provisions provided by the Scheme, two additional temporary arrangements have further increased the level of benefits, namely:

  • Old Benefit members of the Scheme have received preferential rates of reduction for early payment of pension on voluntary retirement, and on redundancy for those with 10 or more years' pensionable service and who are aged between 40-44, and

  • Old and New Benefit members who have left through compulsory retirement over the age of 50 have typically received a discretionary uplift to their pension of up to 20%.

These enhancements have been regularly reviewed and it had previously been decided that the additional cost would be funded through the Scheme by making use of the surplus until 31st March 2002.

Taking into account most recent actuarial projections and the costs to the BBC of running the Scheme, the BBC's Executive Committee has decided that:-

  • from 1st April 2002 the temporary preferential rates of reduction for Old Benefits members will cease, with members receiving the standard rates as set out in the Old Benefits Pension Handbook (1997);

  • from 1st April 2002 the normal level on compulsory early retirement will be immediate unreduced pension (Old Benefits) and immediate unreduced scale pension (New Benefits) as set out in the relevant handbook -without any additional discretionary augmentation funded through the Pension Scheme. The discretionary augmentation has never been a Pension benefit entitlement and has never formed part of the Pension Fund Deeds.

However, as the BBC is currently part way through its 'One BBC' restructuring changes, as a transitional arrangement only, it is proposed that Old Benefit Members aged 40 to 44 with 10 or more years' Pensionable Service who are served notice of redundancy on or before 31st March 2002 will receive early retirement payment terms in line with the temporary improvements currently in place.

The BBC Pension Fund Trustees were informed of the above at their meeting in October.

The above decisions were not taken lightly as the BBC appreciates the value both potential and current employees place on the BBC's pension arrangements. However, it is in everyone's interest to ensure that Pension Fund's long term security is protected for all its members and I should stress that neither the rules of the Pension Fund nor the standard benefits set out in the Old and New Pension Benefit Handbooks are affected as result of these changes.

Please do not hesitate to contact me if you have any questions. I note that the temporary preferential discount rates for Old Benefit members forms part of the joint unions pay claim for 2002 and I am sorry that I was not able to advise you of these changes before you submitted your claim. If you wish to meet on this matter before our next NJC Quarterly Liaison Meeting on 28th November, please let me know.

For your information, this letter has been also sent to the NUJ and AEEU.

Yours sincerely

Gillian Alford
Head of Employee Relations & Policy

Union reply to BBC

9th November 2001

Dear Gillian [Alford]


Thank you for your letter of 2nd November 2001, the contents of which are a source of considerable concern. You should be aware that the imposition of a change like this will cause a great deal of anger amongst our members and we will be opposing it.

One point of particular concern is the announcement of redundancies in F&L. I assume that all those made redundant under those proposals who leave the payroll prior to the end of March 2002 will be eligible for the current enhanced benefits. If that is not the case please can you let me know. Please could you also clarify the position for those notified of their redundancy before 31st March or 1st April 2002 but who may still be on the payroll after that date.

I would like to request a meeting to discuss this imposed change at the earliest opportunity. I would be grateful if you could provide me, in advance, with the actuarial information and any other financial data and projections which formed the basis for this decision. I am copying this letter to the NUJ and AEEU.

Yours sincerely,

Supervisory Official

12 November 2001