BBC plans to close final salary pension to new entrants, raise retirement age to 65

BBC plans to close final salary pension to new entrants, raise retirement age to 65

	Published : Sat, 22 Apr 2006 11:20 By : Andrew Stead Print this Story

LONDON: The BBC announced Friday it is planning to close its final salary pension scheme to new entrants and raise staff retirement age to 65. The broadcaster also proposes to increase the contribution rates its employees will have to pay for their pensions.

The proposals drew immediate ire from unions, which described them as creating a two-tier workforce. They threatened industrial action saying the BBC had a surplus in its fund and had taken a 14-year permanent holiday from the scheme.

General secretary of the National Union of Journalists Jeremy Dear said the union will not accept attempts to make staff pay for the BBC's failure to properly fund the scheme.

The BBC's director general Mark Thompson said the proposed changes are necessary so that the final salary scheme remained secure and affordable.

The BBC's pension fund is one of the largest in Britain with over 6.4 billion pounds in assets. In 2002, the scheme had some 441 million pounds in surplus, which had fallen to about 13 million pounds in 2005, on account of higher life expectancy and lower returns on investments.

The proposed employee contributions to the fund will increase from the current 5.5 per cent to 6 per cent on 1 September and then to 7.5 per cent on 1 April 2007. A further increase of up to 1.5 per cent may be required the following year. Meanwhile, the BBC's contribution will go up from 7.5 per cent to 17.3 per cent in April 2007.

The broadcaster has nearly 21,000 people on its rolls.

The BBC said new staff joining the firm after 31 August will be able to participate in a defined benefit scheme offering a pension based on the average salary they earned during their career.

The NUJ said staff joining the new scheme would be 30 per cent worse off than the final salary scheme members.

All the staff reaching the retirement age after 31 March 2016 will be required to work up to the age of 65 or accept a reduced pension.

Media analysts feel the salary levels in the BBC are lower compared with other commercial organisations and its generous pension scheme has been seen as one of the key benefits that attracted people to it.

Thompson, in an e-mail to the staff, said, "The BBC pension scheme has a special place in our reward package and it provides valuable benefits. I also believe it's important to the BBC as an organisation - helping us attract and retain the talented people we need to provide great services for the public. But the pressures on the scheme mean that for it to remain secure and affordable, we have to make some changes both to its benefits and to the level at which it is funded by the BBC and its members."

The union officials, who are meeting the management, said their constituents will meet next week to determine what course of action to be taken.