Consultation on BBC pensions

Unions are canvassing members' views on "unacceptable" changes in BBC pensions.

At a meeting today, representatives of BECTU and NUJ were told that a cut in pension entitlement for staff retiring early, or being made redundant over the age of 40, was necessary to ensure the long-term survival of the pension scheme.

The BBC announced earlier this month that a discretionary formula under which many staff had left the Corporation with pensions enhanced by up to 20% was to be scrapped in March 2002.

Negotiators told the BBC that the change was unacceptable, and would be resisted if possible.

According to managers at the meeting, the savings achieved by abolishing the enhancement would ensure that the BBC's pension fund would remain in surplus, with more value than it needs to meet its obligations, for the next eight or nine years.

Union representatives pointed out that this would simply delay the moment when the Corporation, currently paying 4.5% of its wage bill into the pension fund, would have to increase its contributions to a level of 15% or more once the surplus had gone.

Managers acknowledged that without the surplus being used to pay pensions to thousands of retired staff, the BBC would have to step up its payments from approximately £25m per year, to as much as £100m. However, they emphasised that even after the cost-saving reduction in benefits, the BBC scheme would still be one of the best in the UK, giving staff the right to retire from the age of 50 without punitive penalties.

Introduced in the 1990s to soften the blow of redundancy for thousands of staff hit by job cuts, the special formula was, said the BBC, a short-term measure which had always depended on periodic renewal to continue. It was not a guaranteed right and could be scrapped without changing the deeds or rules of the BBC pension fund.

The unions condemned the proposed change, which had been approved by the BBC's management executive committee rather than the Pension Trustees, on several grounds:

  • the special formula was a valued benefit to staff, which had helped the BBC to achieve relatively painless job reductions;
  • senior BBC executives had often departed in the past with pension enhancements which cost, pro rata, far more than the formula for staff generally;
  • the £20m per year estimated cost of continuing the formula was modest compared with the BBC's income of £2.2bn;
  • many staff facing redundancy in the next few months could be caught out by the change and be forced to retire on a reduced pension.

Management accepted that there could be problems for this last group of staff in areas like Factual and Learning Production, and parts of Resources Limited which may cut jobs early next year. To deal with the "transitional" period leading up to March 31 when the special formula is planned to end, the management proposed that staff employed directly by the BBC would:

  • be entitled to the special formula if they were given notice of redundancy before March 31 2002, even if their employment actually ended afterwards;
  • also be covered by the formula if they were hit by departmental restructuring proposals which are given financial approval by the management executive committee before January 31 2002, regardless of notice dates.

For staff choosing to retire of their own volition, and not because of redundancy, the March 31 date would be inviolable, and none would enjoy the special formula after then.

Management explained that staff given enhanced pensions after March 2002 thanks to the "transitional" arrangements would be funded by the BBC itself, and not from the pension fund. While this would be guaranteed for full BBC employees, no decision had been reached on funding for staff in the Corporation's subsidiary companies - Worldwide Ltd, Resources Ltd, and Technology Ltd.

Unions were told that an announcement about transitional arrangements for staff in subsidiaries was likely to be made next week, once problems with "fair trading" regulations had been resolved.

The BBC was warned that the planned reduction in pension rights had caused major concern among the many staff who belong to the "old benefits" pension scheme - recent employees have been limited to joining the "new benefits" scheme where the special formula has never applied.

Members of both unions are being asked to pass their views on the change to representatives, and further meetings will be scheduled with management once their opinions have been collated.

BECTU members can send e-mail comments to union official Luke Crawley or call union Head Office on 0207 437 8506.

22 November 2001