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Pensions Shake-up (Read 17208 times)
Dickie Mint
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Pensions Shake-up
Jun 29th, 2010, 10:40am
 
See :
http://news.bbc.co.uk/1/hi/business/10443981.stm

So how does that work, and does it affect we pensioners?
And will it apply to the the DG and top brass too?

We seem to suddenly have this huge deficit, when we were assured we wouldn't have!

See also BECTU response:
http://www.bectu.org.uk/news/868

Reading the two, it doesn't affect us (yet?!!) but those in employ will only have the bit of Salary Pension is worked out on raised by 1% a year.

Richard
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Re: Pensions Shake-up
Reply #1 - Jun 29th, 2010, 11:15am
 
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Re: Pensions Shake-up
Reply #2 - Jun 29th, 2010, 11:18am
 
And Pensions Dept..

http://www.bbc.co.uk/mypension/sites/updates/pages/100630.shtml

Which says:-

"Pensioners and former employees (deferred members) are not affected by the proposals."  

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Re: Pensions Shake-up
Reply #3 - Jun 29th, 2010, 11:37am
 
Zarin Patel is the BBC's Chief Financial Officer.

This is  her blog:-


http://www.bbc.co.uk/blogs/aboutthebbc/2010/06/changes-to-the-bbc-pension-sch.sh...
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E-mail to all staff
Reply #4 - Jun 29th, 2010, 1:13pm
 
This email is going to everyone on behalf of Lucy Adams and Zarin Patel

Dear all,



We are writing to you today to give you information about changes we are proposing to the BBC Pension Scheme. The 2009 interim valuation being published today by the Scheme Trustees shows that the Scheme’s deficit has increased from £470m in 2008 to around £2 billion. The deficit is the shortfall between the BBC’s future pension liabilities and the assets it has to fund these liabilities. As an organisation which is paid for by the public, but which unlike much of the public sector operates a self-funding pension scheme, we need to act now to make a number of changes that will reduce this significant shortfall.

The deficit has grown because the Scheme’s assets, like those of many other pension schemes have performed poorly due to the global economic downturn.  Although financial markets have improved during 2009/10, the investments in the Scheme have not returned to previously expected levels and the outlook for the future remains uncertain.

The 2010 actuarial valuation, due to be published next year, will also reflect the significant long-term trend of pension members living longer than previously expected. This will also contribute to an ongoing increase in the costs of the Scheme and require additional funding. With people living longer, the cost of funding their pensions inevitably increases.

Along with many other organisations dealing with substantial pension deficits, the BBC faces a choice. To reduce the deficit and continue the current arrangements, without making any changes to the Scheme, would require the BBC’s contributions to rise from the equivalent of 3.5% of the licence fee to around 10% – with a possibility of further increases being necessary in the future. The BBC believes that this level of funding would be unaffordable and would damage our ability to maintain the quality and range of our services to the public.

So instead we are proposing a number of measures that will reduce the existing deficit and help ensure the Scheme remains affordable and sustainable in the future. We have thought long and hard about the changes that we propose and have tried to balance doing the right thing for staff against what is acceptable to licence fee payers.

The proposed changes are as follows:

The current Scheme will remain open to existing members but close to new joiners from 1st December 2010.
Employees who are currently members of the Scheme will continue to build up benefits under the current structure. However from 1st  April 2011 future salary increases for calculating pension benefits will be limited to 1% per annum. In other words, after this date pensionable salary will grow at a maximum of 1% per year, no matter what actual salary increases an employee receives.
We will introduce a new competitive, flexible, defined contribution plan for new joiners. This will give employees a choice over the levels of contributions they make and the BBC will match or better these contributions up to a certain level.
We will give existing Scheme members the choice of joining the new defined contribution plan or remaining in the existing Scheme under the changed terms outlined above.
The BBC will now be consulting on these proposals from Thursday 1st July to Thursday 30th September. The consultation period is an opportunity for you to understand and feedback on the proposed changes. If you want to contribute to the consultation you can click here for more information on how to do this.

It is important that you fully understand the proposals even if you decide not to contribute to the consultation. With this in mind, we’ve put in place further information and a number of services to support you:

Details of all the proposed changes are being sent out in the post to your home address today.
The myPension site on Gateway has further detailed information on the proposed changes and the new defined contribution plan, including examples to illustrate the changes and a modeller (via myDetails) to help you understand the possible impact on your pension.
The pension service line will be available on 029 2032 2811(internal 01 22811) from 08:30 to 17:30 Monday to Friday. Or via email at myPension@bbc.co.uk
There will be a series of staff seminars hosted by our Pensions team, across the BBC from 5th July. The team will explain the proposed changes in greater detail and give you the chance to ask questions face to face. You can get details of the seminars here.
Later today, all existing Scheme members will also receive an email from Jeremy Peat, Chairman of the BBC Pension Scheme Trustees, with further details of the 2009 interim valuation of the Scheme.

If you have questions about the proposed changes, do please consult the myPension site on Gateway in the first instance and then if necessary the pension service line on 029 2032 2811 (internal 01 22811).

We understand that Scheme members will be concerned about the proposed changes, however by taking action now we believe that these proposed measures will help ensure that the pension benefit structure remains affordable and sustainable for the future.




Lucy Adams                                                                             Zarin Patel

Director BBC People                                                             Chief Financial Officer
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Re: Pensions Shake-up
Reply #5 - Jun 30th, 2010, 7:18am
 
This is taken from Ariel Online:

Pension Changes
June 28 2010


The BBC wants to effectively end the existing defined benefits [DB] pension scheme – which for staff on Old and New benefits is linked to their final salary. Although members can remain in the scheme future increases to their pensionable  salary would be capped at 1% every year, though their actual salary might increase at a greater rate.

It follows an interim actuarial evaluation by the Scheme Trustees, which revealed that last year the deficit in the pension fund had soared to £2BN. The BBC estimates filling the gap while retaining current pension arrangements could see its contribution to the scheme rise to around 10% of the licence fee.

Proposals for consultation
So the following actions are proposed for consultation with staff.

* Keeping the Scheme open to current members.

* From 1 April 2011 future increases in pensionable salary [the salary used to calculate your defined benefit pension] will be limited to a maximum of 1% a year.

* From 1 December 2010 the Scheme will be closed to new members. After that date new joiners will be offered a defined contribution [DC] plan. The BBC will tender for a supplier of that plan.

* All current Scheme members will be able to choose whether to remain in it or join the new defined contribution plan for future pension benefits.

There is, at present, no suggestion of raising the pensionable age, which is 60 for Old and New Benefit members, and 65 for staff on the Career Average Benefits scheme introduced in 2006, nor of asking members to pay higher contributions.

Reasons why

The BBC's chief financial officer, Zarin Patel, says the existing arrangements have to change because the costs of providing them have soared. This is mainly attributable to increases in longevity, which are predicted to cost pension funds even more in future years. Financial market conditions have also contributed, although they are stabilising.

Patel said: 'I hope people will understand the reasons why we have to make the changes, and that the alternatives, asking the licence fee payer for more, or taking money out of programmes and putting it in pensions, would be a really unpopular choice.'

If agreed the proposals would directly affect everyone’s pension, with the exception of staff retiring before April 2011, or those who get pay rises of less than 1% a year. There will be no reduction in defined benefits built up to date, and you can continue to accrue more through the Scheme, but these will increase by no more than 1% a year.

What happens now
Younger staff, and those who have only worked at the BBC a short time, in particular, will need to seriously consider their options, as the longer they work, and the more their salary increases, the further their pension from the existing scheme will fall behind.

The present DB scheme means you know what your pension will be, and it will be pegged to your final salary.

A DC scheme takes payments from the employer and employee and invests them, with the proceeds used to buy an annuity on retirement. Annuity rates rise and fall, affecting the amount of income that can be generated by your investment, which will be linked to stock market conditions when you retire.

And a defined contribution scheme requires you to be pro-active. You will need to monitor how your fund is doing, so you can increase contribution rates when investment returns are poor, or costs rise, otherwise your retirement pension will be smaller than you might have expected.

For staff who join the DC scheme the BBC is offering to ‘match’ contribution rates, which would start at 4% of salary, and to encourage greater saving will pay an additional 1% for those who contribute 6% or 7% of salary, and 2% to those who save 8%. Members can make contributions of more than 8% but those would not be ‘matched’. Nor will future pensionable salary increases be limited in the DC scheme, as they will in the DC scheme.

Consultation and advice
These proposals are sweeping and  important for the future of every member of staff. The myPension site on Gateway has dedicated pages on the consultation, with illustrations of how the changes will work and detailed questions and answers.

There is an online modeller from which you can estimate how the proposed changes might affect your pension.

There will be pension seminars around the UK, and a list of dates and venues will be posted on the myPension site.

If you want to comment on the proposals email myPensionFeedback, or write to the Pension and Benefits Centre, Broadcasting House, Cardiff, CF5 2YQ, and the consultation process closes on September 30.
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Re: Pensions Shake-up
Reply #6 - Jun 30th, 2010, 7:52am
 
And this from The Daily Telegraph.:-

http://www.telegraph.co.uk/finance/personalfinance/pensions/7860907/BBCs-closure...


Quote:-

"Fraser Smart, an actuary with Buck Consultants described these proposals as a "horrific cut" to BBC pensions. Thanks to the complex way in which final salary pension schemes are structued, these changes mean that not only will your future pension be seriously reduced, it also reduces, in real terms, all pension benefits accrued to date.
The numbers are startling. Take a 30-year old earning £25,000 who has been a member of the pension scheme for five years. On current projections he would get a pension worth £24,831 in today's money, according to Hargreaves Lansdown, if he stays in the scheme until retirement (which at the BBC is at 60).

If these proposals go ahead he'll get a pension of just £8, 751.That's about £16,000 a year less. The picture is almost as bleak for older workers. A 50-year old manager, on a salary of £75,000 would see his projected pension fall from £50,675 a year to £36,658 - quite a dent in his pension plans, and of course , he has far less time to make up this shortfall.

If these proposals go through BBC staff will be in for a shock when the get their next pension statement."
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Re: Pensions Shake-up
Reply #7 - Jun 30th, 2010, 8:00am
 
From The daily Mail:-

http://www.dailymail.co.uk/news/article-1290549/BBC-slashes-gold-plated-pension-...


Quote:-

"A man aged 25 who joined the BBC five years ago, currently earns £25,000 and gets a 4.7 per cent pay rise every year, could have looked forward to a pension worth £31,266 a year on retirement at age 60.
Following yesterday's proposals, his pension collapses to about £9,200 a year.


One 50-year-old BBC worker said yesterday that the corporation's own pension calculator said his pension would be reduced by about £4,700 a year.
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Re: Pensions Shake-up
Reply #8 - Jul 5th, 2010, 2:34pm
 
Mark Thompson's email to staff about BBC pay and pension proposals may be found here:-


http://www.guardian.co.uk/media/2010/jul/05/bbc-mark-thompson-email
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Re: Pensions Shake-up
Reply #9 - Jul 9th, 2010, 9:09am
 
"If a person starts drawing a pension at 60 and lives until they are 80, they would receive 25 per cent less in the weeks before they died" is one take on the proposed change to the way BBC pension increases are calculated.

http://www.telegraph.co.uk/finance/personalfinance/pensions/7880179/Millions-to-...
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