BBC proposes pension scheme cutbacks

The BBC has proposed to close its final salary pension scheme to all new employees and place a cap on contributions to existing members to tackle its massive pension deficit.

Last year, an interim valuation by the BBC pension trustees showed that the scheme's deficit had ballooned from £470m in 2008 to around £2bn in 2009.

In proposals put to staff today, the corporation outlined plans to close the defined benefits scheme, which guarantees members a minimum pay out on retirement, for all new joiners from December 1, 2010.

Current members paying into the scheme will continue to build up benefits, but the corporation will place a 1% per annum cap on its contributions from April 1, 2011.

New BBC staff will be given the chance to join a "competitive and flexible" defined contribution plan, but that scheme will not pay out a set amount each year. Existing BBC employees will also be given the chance to join the plan going forward.

In a blog posting, the BBC's chief financial officer Zarin Patel said that the proposals, if approved, will represent the "most extensive changes" in the pension scheme's history.

"These are tough decisions, and the first major reform of pensions in the public sector," she said.

"But we believe we have no option if we are to avoid a new burden on the licence fee payer while ensuring that staff, many of whom have paid into their pensions for years, continue to receive what they are due."

Patel said that poor performance in the financial markets and the fact that people are "living longer" has motivated the BBC to take urgent action to tackle its pension deficit.

She added: "I believe the solutions we have proposed today will deliver a pension scheme that is sustainable, affordable and flexible for BBC staff and the licence fee payer."

The BBC will run a 90-day consultation on the pension plans from July 1 to September 30, with the proposals likely to face staunch opposition from the trade unions.