BBC’s pension deficit grows, but who will foot the bill?

A new valuation by the BBC’s independent pension trustees has revealed the organisation’s pension fund deficit has almost doubled.

Standing at around GBP 1.1 billion in 2010, the shortfall has grown to GBP 2 billion this year.

Compounding the bad news is a statement revealing the scheme’s funding level decreased from 87.9% in 2010 to 83.4% in 2013.

Under the previous, 2010 plan, the BBC was expected to pay GBP 375 million into the pension fund.

After the recent valuation however, the organisation has agreed to pay over GBP 740 million over the coming four years.

Whilst staff were previously asked to plug the gap, strikes, the cutting of prime time programmes including Newsnight and a collapse in negotiations with unions led to a retraction of the request.

Now, the broadcaster plans to use the licence fees paid by the British public to address the shortfall.

The figures

Clocking in at GBP 185 million each year, the pension fund’s top-ups are nearly twice the yearly Radio 4 budget.

The figures mean approximately GBP 7.36 of every household’s GBP 145.50 licence fee will have to go towards the pension fund’s deficit.

A small scale scene of outrage has been caused as, rather than release the figures publically, the BBC chose to publish the figures in an internal email to its staff.

This has prompted accusations the organisation was attempting to hide the news.

A mounting deficit

Many BBC staff had a substantial final-salary scheme based on the career length of service and yearly end of service earnings.

On the larger side of the scale, this includes a GBP 3.9 million pension pot for Dame Jenny Abramsky, a former radio chief who retired in 2008.

In the face of the mounting deficit and ever-growing pensions, the scheme was closed in 2010.

The broadcaster has regularly faced criticism it is overstaffed with managers, leading Lord Patten, as Chairman of the BBC Trust, to publically state in 2013 that the number of BBC managers should be halved.

Of the 4,500 staff on either fixed-term or permanent contracts, an FOI request found that 2,000 had the word ‘manager’ in their title.

Bureaucracy also meant that around 2.5% of the workforce were senior management level, which Lord Patten hoped to reduce to 1%.

In a speech which foreshadowed the current problems, Lord Patten was noted as saying “licence fee payers don’t expect the BBC to pay sky-high commercial rewards to people who work for a public service.”

He continued, “they do expect the BBC to deliver the highest quality programmes and services.”

Anticipating the deficit

Whilst the GBP 740 million total proposed payment has come as a shock to many, the BBC stated yesterday that it had anticipated the growing deficit as early as two years ago, and planned accordingly.

They stated this meant that the budgets for programme’s would remain unaffected.

Last night, insiders at the BBC said the deficit was caused by a combination of low interest rates and the increasing life expectancy of pensioners.

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