This is text of a BBC announcement:

Mark Thompson advises staff of proposals to change BBC Pension Scheme
Date: 21.04.2006
Announcement from BBC Director-General Mark Thompson, sent to all BBC staff, Friday 21 April 2006.
Subject: Important news about the BBC Pension Scheme



For some time now there has been widespread coverage about pensions and the funding difficulties many companies are facing.

Many organisations have decided to reduce the level of benefits, whilst others have closed their final salary schemes altogether.

The BBC's pension provision has also come under scrutiny - our pensions are important to all of us and I know the speculation has caused concern among many of you.

We have now completed an extensive review of the BBC Pension Scheme and the 2005 Valuation has also just been finalised, which has helped us to fully assess the options available to us.

Pressure on the funding of pension schemes has increased for all employers over recent years. Improved life expectancy, anticipated lower investment returns, plus mounting legislative requirements have all served to increase the cost of providing a pension.

The BBC Pension Scheme is currently healthy but it is reaching the end of its surplus and the risks associated with funding a final salary scheme on the scale of ours have affected the affordability of the Scheme.

The BBC Pension Scheme has a special place in our reward package and it provides valuable benefits. I also believe it's important to the BBC as an organisation - helping us attract and retain the talented people we need to provide great services for the public.

But the pressures on the scheme mean that for it to remain secure and affordable, we have to make some changes both to its benefits and to the level at which it is funded by the BBC and its members. Doing nothing is not an option.

If you are an active member of the Scheme you will shortly receive a letter, sent to your home address, explaining the proposals in more detail, but in outline they are:

   * Final salary pension benefits will be kept open to all current members and anyone who joins the Scheme on or before 31 August 2006.
   * Contributions to the Scheme will increase both for members and the BBC.
   * The BBC's contribution increased on 1 April 2006 to 7.5%. It is proposed that it will increase on 1 April 2007 to 17.3%.
   * It is also proposed that members' contributions should increase: on 1 September 2006 from 5.5% to 6% and on 1 April 2007 to 7.5%. Member contribution rates will be reviewed again following the 2007 valuation and, subject to approval from the Pension Trustees, a further increase of up to 1.5% may be needed from 1 April 2008.
   * The normal pension age will change from 60 to 65, but only for benefits built up after 31 March 2016.
   * A new defined benefit 'career average' section will be introduced in the Scheme for all new entrants from 1 September 2006.

I believe that these proposals can both secure the continuation of the Pension Scheme and also strike a fair balance between retention of a highly valued benefit and our responsibility to the licence fee payer. But I'd like to hear your views too.

A period of consultation starts today, with a view to implementing the proposed changes from September. I encourage you to take the opportunity to share your views on these proposals with us.


Mark

This is taken from the FT:

Unions warn BBC on pensions shake-up
By Ben Hall, Political Correspondent
Published: April 22 2006 03:00

The BBC has unveiled plans to close its final salary pension scheme to new members and raise the normal pension age from 60 to 65, prompting warnings of industrial action from the broadcasting unions.

Mark Thomson, BBC director-general, said the changes, which include higher contributions by the corporation and about 21,000 staff, were necessary to ensure the pension scheme remained "secure and affordable". However, experts said the changes were unlikely to address an underlying deficit in the scheme.

The state-funded broadcaster, which is negotiating with the government on a new licence fee, is the latest large employer to announce a scaling back of pension benefits. Rolls-Royce, the aerospace group, started talks this month to close all its final salary schemes to new members while promising a £500m one-off payment and higher contributions to address a combined scheme shortfall of £1.3bn.

British Airways last month unveiled measures that included a cap on benefits and longer working in return for a £500m employer contribution, to plug a £2bn scheme deficit.

Union leaders protested that, unlike those two companies, the BBC's scheme, which is ultimately funded by the licence fee payer, had a £13m surplus. Bectu, the broadcasting union, promised to organise "widespread resistance" to the changes. The BBC was hit by industrial action last year when journalists and technicians went on strike over job cuts.

Jeremy Dear, general secretary of the National Union of Journalists, urged the BBC to halt the plans. "What is clear is we will not accept attempts to make staff pay for the BBC's failure to properly fund the scheme. The pension scheme is cash-rich, in surplus and the BBC admit there is no crisis - so why are they seeking to penalise staff in this way?" The BBC said the surplus had shrunk rapidly from £441m in 2002, half of the change due to increased longevity.

Under the proposals outlined to staff yesterday, the BBC's final salary scheme will close to new members on August 31 and will be replaced with a career average scheme, which the unions say will be 30 per cent less generous. John Ralfe, a pensions expert, said this would still be better than the defined contribution schemes replacing final salary benefits in much of the private sector.

The BBC is proposing to increase its contributions to the new scheme from 7.5 per cent this year to 17.3 per cent in April 2007. It wants staff to increase their contributions to 7.5 per cent from April 2007 and possibly to 9 per cent from 2008.