BBC pension deficit is 'just over £1.5bn'

A long-awaited valuation of the BBC's current pension deficit is understood to have put it at just over £1.5bn.

However according to sources, the corporation's pension black hole will reduce to around £1.1bn after controversial planned reforms.

Although still a big deficit, it is less than the £2bn some within the BBC had feared. Last June a letter was sent to staff warning that a 2009 interim valuation showed that the BBC's pension scheme's deficit had increased from £470m in 2008 to around £2bn.

Last summer there was widespread anger after BBC management announced it wanted to scrap its generous final salary pension scheme to plug a £1.5bn-£2bn pension deficit. In November several news bulletins were forced off air after staff voted for industrial action.

However, a compromise was reached with some unions and a new scheme was offered, dubbed CAB 2011, with some concessions.

If the pension deficit had turned out at lower than £1.5bn then the BBC had said it would reopen negotiations with technicians' union Bectu.

The BBC declined to comment.


By:- Tara Conlan

Source:-
http://www.guardian.co.uk/media/2011/mar/23/bbc-pension-deficit

This is the text of an email from the DG:

From: Mark Thompson
Sent: 23 March 2011 16:19
Subject: Pensions Valuation Announcement

This email is going to everyone

Dear All,

Earlier this afternoon Jeremy Peat, the Chairman of The BBC Pension Scheme Trustees, emailed all members to announce that the 2010 pension valuation has been finalised. There are two parts to this announcement.

First, the pensions deficit before the BBC's proposed changes are factored in has been formally assessed at £1.6 billion as at April 2010. This is in line with our original estimate of a deficit of between £1.5 and £2 billion which we shared with you as part of our original announcement about pension reform last June.

But the changes to pension arrangements which were negotiated and agreed last autumn have had a significant impact on the final valuation of the deficit. Because these reforms reduce the expected future liabilities of the scheme they also have the effect of reducing the deficit we now face. The Chairman of the Pension Scheme Trustees has announced this afternoon that the agreed valuation gives £500 million of ‘credit’ for these reforms and that therefore the final deficit is not £1.6 billion, but £1.1 billion. This remains a substantial sum, but the effect of the reforms is that half a billion pounds which would otherwise have had to be paid into the pension fund to reduce the deficit can instead be used on programmes and services for the public. Without the reforms, many hundreds of BBC jobs would have been lost.

Secondly, we have agreed with the Trustees a repayment plan over an eleven year period to repay the £1.1 billion deficit. The BBC will make an initial payment of £110 million this year followed by a payment of £60 million in 2012 and 2013, £100 million for the next three years and £75 million for the following five years. I believe this repayment plan is fair to both pension scheme members and to the licence fee payer.

So what happens now? The proposed changes to the Scheme that we announced last year will now be implemented. Our priority is to ensure that Scheme members have the appropriate levels of support and information to make the right choice as to which pension option is best for them. There are three options for existing members of our defined benefit Scheme to consider. They are:

Option 1: To remain in the Scheme with a 1% limit on future pensionable salary increases from April 2011.

Option 2: To join the new career average benefits arrangement, CAB2011, between April 2011 and December 2011.

Option 3: To join ‘LifePlan’, the new defined contribution plan, at any point in the future.

To help you make the right decision about what to do, we have put in various levels of support including further pensions seminars, one-to-ones with a pensions consultant and a new pensions modeller to show how these changes will affect you. You can find information on the changes, including all the support available on the pensions website.

I have called an all-staff ringmain session at 5 o'clock today to take you through what today's announcement means in detail. This is at short notice as details of the announcement were leaked to a national newspaper. Following today's ringmain session, we will follow up with additional sessions if required..

All the best,
Mark Thompson
Director-General