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BBC Pension chairman (Read 2839 times)
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BBC Pension chairman
Apr 20th, 2011, 7:53am
 
The man in charge of fixing the BBC's 1.1bn pension deficit has insisted it is not a case of "crossing one's fingers and hoping for the best" with the its 11-year repayment plan.

The deficit will be met with a 900m payment from the BBC over the next 11 years, combined with an estimated 6.2% annual return on the pension scheme's assets, valued earlier this month at 8.2bn.

Questioned why the BBC was not being required to pay off the full remaining deficit and why the rate of return on its assets was higher than initially calculated Jeremy Peat, the chairman of the BBC pension scheme trustees, said: "It is not a case of crossing ones fingers and hoping for the best.

"There is a balance between doing what is appropriate for members and ensuring the BBC's relationship with licence fee payers is not damaged. The assumptions underlying the recovery plan are not predictions, but are expected to be more likely than not to be achieved in practice."

Peat admitted the expected rate of return on assets was "greater than ... prudent assumptions". But he said: "Regulations do not require the assumptions underlying the recovery plan to be prudent; they only have to be 'appropriate having regard to the nature and circumstances of the scheme'."

He added: "The scheme's funding position is regularly reviewed with a formal valuation every three years. If the additional returns have not been achieved, and do not look likely to be in the future, a new recovery plan will be agreed to make good the shortfall."

The BBC's efforts to solve its pension deficit included controversial changes to the corporation's pension scheme, which led to a five-month industrial dispute and a 48-hour strike by the National Union of Journalists in 2010.

The 1.6bn deficit which had been predicted to be much higher is being brought down to around 1.1bn following the reforms agreed with broadcasting unions and BBC staff last autumn.

The BBC will reduce the deficit by 110m this year, then 60m for each of the next two years, 100m annually from 2014 to 2016, and 75m a year for the remaining five years.

Peat made the comments in response to a letter in the BBC's in-house newspaper Ariel by personal finance reporter Ian Pollock, who is also chairman of the corporation's London branch of the National Union of Journalists.

"Two things stand out from the latest valuation of the BBC pension scheme, published in March. The first is just how much the BBC exaggerated the scale of the likely deficit. Staff were repeatedly told it would be about 2bn, and on one occasion were told it might be as much as 2.5bn," said Pollock.

"In the event it is much smaller at 1.6bn (before the effect of the forthcoming changes). No surprise there. What is surprising is that the trustees have been very lenient when asking the BBC to pay off the remaining deficit, set at 1.1bn after taking into account the impending changes.

"The BBC is agreeing to pay only 900m over 11 years, with the trustees apparently letting the BBC off the remaining 200m because they hope investment returns will be slightly higher than they assumed when first calculating the deficit. This makes no sense at all."


By:- John Plunkett

Source:-
http://www.guardian.co.uk/media/2011/apr/20/bbc-pension-chairman-deficit
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