This is taken from Citywire:BBC pension victory sounds wrong note for workers
The BBC has won a High Court battle over its plans to cap the amount of pensionable income that can be taken from future pay increases.
by Michelle McGagh on Jun 07, 2012 at 15:52Members of valuable final salary pension schemes could see their retirement pay-outs capped after the BBC won a High Court battle over its pension scheme.
The BBC was taken to court by John Bradbury, a member of the BBC Philharmonic Orchestra, after it capped the amount of future pensionable salary increases at 1%.
Members of final salary schemes, also known as defined benefit pensions, receive a retirement income based on a multiple of years worked at the company and a proportion of the employee’s salary at retirement. By capping the amount of a pay rise that can be taken into account when calculating the pension when the employee retires, the BBC will have to pay out less.
In the case, Bradbury claimed the BBC’s changes to the definition of pensionable pay, by introducing the 1% cap, were carried through without the permission of the pension trustees. However, the court found that as long as the BBC acted in good faith, a 1% limit on pensionable pay rises could be applied to all members of the scheme.
The court battle came after the BBC made changes to its pension scheme to try to plug its £1.6 billion deficit by making the scheme cheaper to run. The BBC currently runs two defined benefit, also known as final salary, pension schemes.
It gave staff in these pensions the option of moving to a different career-average system or staying where they are with a 1% cap. Around 8,000 moved to a career-average scheme, and the same number remained in the final salary scheme.
Mr Justice Warren, who presided over the case, said: ‘The BBC came up with the options which it offered members in order to put the scheme on an affordable or sustainable basis for the future.
‘If financial and other considerations can lead to the termination of a scheme, such considerations must surely be capable of leading to changes to benefits with a view to putting the scheme on a sustainable basis for the future.’
Employees who joined the BBC after late-2010 have only been offered a defined contribution scheme, in which the pay-out is dependent on contributions made and the success of the investment of the fund.
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