BBC journalists and their pension scheme
Whilst I have never been much of an ‘morning person’, part of my ritual each morning is to switch on the radio and listen to The Today Programme on Radio 4 for a few minutes before I get up.
It was disappointing this morning to discover that the show had been replaced with a previously broadcast episode of The Estuary; not because I have anything against wading birds, but because it was an episode I had already heard.
The reason for the change in scheduled programming is that BBC staff are holding a 48 hour strike over proposals to deal with the deficit in the BBC pension scheme.
This is the first of two planned strikes, with the National Union of Journalists unhappy that its members will have to pay more pension contributions, work for longer and receive lower pensions in retirement.
The BBC is a public-sector organisation and, in common with all public-sector organisations, is facing up to the reality of austerity measures imposed by the government to deal with the record budget deficit.
Unlike many other public-sector organisations, the BBC pension scheme is ‘funded’. This means that the cost of funding the pension promises made within this defined benefits scheme are paid out of the BBC budget, rather than out of general government revenues.
Trouble with the BBC pension scheme started before the recent spending review announcements. It was running a deficit of approximately £2bn; this is the gap between the assets and liabilities of the scheme.
Reducing the size of this deficit, as the pension scheme trustees are required to do, would require a substantial increase in the size of the licence fee. As the BBC discovered last month, the licence fee is going to be frozen for the next six years.
The alternatives are asking for bigger contributions from pension scheme members, reducing future benefit accrual and increasing the scheme retirement age.
What management at the BBC have proposed is a cap on future increases in pensionable pay. This will rise by no more than 1% a year from April.
By capping future increases in pensionable pay, the massive deficit in the scheme could be reduced.
If union members are reacting this badly to a sensible suggestion to cap the rising deficit of an unsustainable scheme such as this, we should all expect to be hearing a lot more from wading birds rather than John Humphrys in the morning.