Changes to BBC pensions 'were the best option'

By JON REES
Updated: 17:55 EST, 14 August 2010

BBC director-general Mark Thompson will next week outline the alternative pension proposals considered by the corporation to try to placate staff threatening strike action over the present controversial plans. The result of the strike ballot will be known on September 2 and action could follow on September 9 at the earliest.

The BBC's pension scheme has a £2billion shortfall and the most controversial part of the proposals would see pensionable salary rises capped at one per cent for those staff in its final salary scheme, which would be closed to new members.

The move is the first such change to a public sector organisation's pension scheme. However, this week Thompson will give an interview to the BBC's in-house magazine, Ariel, explaining how the corporation reached its decision. The following week he will lay out the alternative plans considered by the management.

Alternative proposals: Mark Thompson, the director-general of the BBC, has spoken out to avert strike action

He has told staff: 'These are very tough proposals. There is no upside.' They will show that the corporation considered increasing the retirement age to 65 from its present 60 for staff in the two main schemes. This would have cost the BBC about nine per cent of its annual licence fee income of about £3.5billion.

The BBC is aiming to make its pension contributions equal to 3.5 per cent of income.

It has also considered reducing the rate at which pension scheme members accrued benefit. Its calculations showed that this would not reduce the deficit and it would cost 8.5 per cent of the licence fee income.

The BBC said it had also received legal advice that alternative strategies risked breaching its pension scheme rules, while its present proposals would not.

However, the BBC is expected to change its rules so senior staff will not be exempt from the new proposals.

There are 59,550 BBC pension scheme members and 18,776 pensioners.