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BBC forced to pay £740m into pension scheme as deficit soars to £2bn BBC forced to pay £740m into pension scheme as deficit soars to £2bn
(about 1 hour later)
The BBC has been forced to double the amount it needs to plough into its pension scheme to £740m over the next four years, to try and plug a funding deficit that has ballooned to £2bn.The BBC has been forced to double the amount it needs to plough into its pension scheme to £740m over the next four years, to try and plug a funding deficit that has ballooned to £2bn.
The amount that the BBC has agreed to pay over the next four years, until the end of 2017, has increased from £375m to £740m.The amount that the BBC has agreed to pay over the next four years, until the end of 2017, has increased from £375m to £740m.
Licence fee payers will foot the bill, with the BBC shying away from attempting to increase staff contributions after a bruising battle over reforming the pension scheme in 2010 that led to industrial action.Licence fee payers will foot the bill, with the BBC shying away from attempting to increase staff contributions after a bruising battle over reforming the pension scheme in 2010 that led to industrial action.
According to the latest three-year valuation of the BBC pension fund – the value of its assets minus the liabilities to retiring staff – the deficit has ballooned from £1.1bn in 2010 to £2bn last year.According to the latest three-year valuation of the BBC pension fund – the value of its assets minus the liabilities to retiring staff – the deficit has ballooned from £1.1bn in 2010 to £2bn last year.
The scheme's deficit has almost doubled on the back of the poor performance of the economy, as well as higher life expectancy, and meant the BBCs's payments have skyrocketed under a new plan.The scheme's deficit has almost doubled on the back of the poor performance of the economy, as well as higher life expectancy, and meant the BBCs's payments have skyrocketed under a new plan.
The BBC has said it will not be seeking to push through changes to the pension scheme which would see staff footing part of the bill – instead it will all come from the licence fee.The BBC has said it will not be seeking to push through changes to the pension scheme which would see staff footing part of the bill – instead it will all come from the licence fee.
After the acrimonious industrial action in 2010, which led to programmes going off air, the BBC and the broadcasting unions reached a compromise that led to the closing of the corporation's final salary pension scheme. However, the dispute has apparently left BBC management with no further appetite for confrontation with staff over pension deficit issue.After the acrimonious industrial action in 2010, which led to programmes going off air, the BBC and the broadcasting unions reached a compromise that led to the closing of the corporation's final salary pension scheme. However, the dispute has apparently left BBC management with no further appetite for confrontation with staff over pension deficit issue.
It is understood that the corporation would not be able to push through more major changes to the scheme because the procedure to gain approval – which includes a green light from the pension scheme trustees, a consultation and independent legal advice – is thought unlikely to go the way of management.It is understood that the corporation would not be able to push through more major changes to the scheme because the procedure to gain approval – which includes a green light from the pension scheme trustees, a consultation and independent legal advice – is thought unlikely to go the way of management.
In any event the BBC says that even a significant increase in contributions from members would still see the corporation have to plough in significant licece fee payer funds as the deficit is so large.
"We are pleased that by working collaboratively with the pension trustees we have finalised the valuation ahead of time, particularly in this economic environment which is challenging for large pension schemes like the BBC's," said a spokesman. "By anticipating this valuation result we have agreed a sensible and affordable plan to address the deficit, without adversely affecting programmes or pension scheme members.""We are pleased that by working collaboratively with the pension trustees we have finalised the valuation ahead of time, particularly in this economic environment which is challenging for large pension schemes like the BBC's," said a spokesman. "By anticipating this valuation result we have agreed a sensible and affordable plan to address the deficit, without adversely affecting programmes or pension scheme members."
The BBC will undertake the next valuation of the pension scheme starting on 1 April 2016. The BBC has 15 months from then to assess, publish and agree a new repayment plan which will then replace the current one.The BBC will undertake the next valuation of the pension scheme starting on 1 April 2016. The BBC has 15 months from then to assess, publish and agree a new repayment plan which will then replace the current one.
Two payments in 2017 totalling £340m of the £740m under the current plan will only be made if the BBC takes almost the total 15 months to agree a deal. This time around it managed it in under eight months. Two payments in 2017 totalling £340m of the £740m under the current plan will only be made at this level if the BBC takes almost the total 15 months to agree a deal. This time around it managed it in under eight months.
"External factors have caused the BBC's pension deficit to increase significantly since 2010 but without recent reforms to staff benefits the BBC would now be facing an even bigger problem," said a spokesman for the BBC Trust. "Before approving the BBC's new funding plan, the trust considered the various options and set parameters around what would be acceptable given our responsibility to licence fee payers. We concluded that this plan provides the best solution because it addresses the shortfall in an affordable and manageable way.""External factors have caused the BBC's pension deficit to increase significantly since 2010 but without recent reforms to staff benefits the BBC would now be facing an even bigger problem," said a spokesman for the BBC Trust. "Before approving the BBC's new funding plan, the trust considered the various options and set parameters around what would be acceptable given our responsibility to licence fee payers. We concluded that this plan provides the best solution because it addresses the shortfall in an affordable and manageable way."
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