Strike threat over BBC pensions

BECTU officials have warned that the union will ballot for industrial action if the BBC makes radical changes to its pension scheme.

Responding to press leaks of a plan to make BBC staff work an extra five years before qualifying for a pension, BECTU said that if the stories were true, widespread resistance would be organised among members.

Reports have also suggested that the scheme might be closed to new members, who would be restricted to a pension plan offering retirement benefits based on a "career average", instead of the current final salary system.

Union representatives are due to meet the BBC on April 21 to discuss a change to retirement rules which would allow staff to continue working beyond the current retirement age of 60.

This change, announced earlier this year to take account of new age discrimination legislation, does not prevent staff from leaving with a pension at 60, as usual.

However, BECTU now fears that the BBC could reveal much wider plans for pension changes at the April 21 meeting if a three-yearly valuation of its pension fund, due this month, reveals a large shortfall.

If changes are proposed on the grounds that the scheme is under-funded, the union plans to demand that the BBC should shoulder the burden of making good the shortfall, rather than reducing its liabilities by cutting benefits.

Many of the problems faced by the pension scheme are a direct result of decisions made by management over the last fifteen years, according to the union, and are not the fault of staff.

Like most pension schemes, the BBC's has been challenged by the phenomenon of retired staff living longer, and thus drawing pensions for longer, as well as a collapse in the value of stocks and shares three years ago.

But in the BBC's case these problems have been exacerbated by the Corporation taking an extended "contributions holiday" in the 1990s, in which its payments into the pension fund were dramatically reduced.

Until 1990 the BBC paid a sum equal to 17% of its wage bill into the fund, which was combined with 6.5% of individual salaries being paid in by staff.

That year, the BBC's contribution was cut to 11%, with staff contributions falling to 5.5%. A further cut in 1992 saw contributions from the BBC and pension scheme members equalised at 4.5% from each.

This low contribution rate of a combined 9% was made possible by a surplus in the fund worth nearly one third of its £2.8 billion value at the time, coupled with extremely optimistic forecasts by actuaries of the future growth in investments.

For the following 11 years, the BBC maintained these historically-low payments into the fund until 2003, when, faced with a warning that the surplus was about to run out, contributions into the scheme from Corporation and staff began to be raised.

By next year, 2007, both the BBC and pension scheme members will pay in 6% each of the wage bill. Although the combined 12% produced by this change will assist in reducing the scheme's shortfall, it is far short of the 23.5% paid in prior to the BBC's lengthy pension holiday.

It also represents a smaller proportionate contribution from the BBC, compared to staff, than was paid in previous decades. Up until 1990 the Coporation usually paid in at least twice as much as staff.

Union officials believe that the only alternative to the scheme being closed, and benefits being watered down, is for the BBC to significantly increase its contribution.

Higher contributions from staff as well have not been ruled out, but BECTU will be demanding that the BBC should first take account of the vast savings it made during the 1990s, estimated by officials at well over £1 billion, and start putting money back into the scheme.