BBC staff are worried that they will not receive appropriate financial advice from their employer as they are told to pick from a three-part pension menu by the end of the year, the head of the media and entertainment union BECTU has told Pension Funds Insider

The 18,000 members of the broadcasting corporation's final salary scheme (ranked the 20th largest pension scheme in the UK by Pension Funds Online) will not be issued with any independent financial advice, leading to staff contacting the union with their concerns.

The BBC is laying on a series of pension seminars and offering staff an individual briefing with a consultant along with providing information on the company's intranet pages. Critical employees claim this range of pointers will not be enough. They point out that the suitability of the three pension options depends heavily on future career plans and salary expectations.

Staff who are close to retirement or not expecting to see a significant pay increase before the end of their BBC careers would logically be better served by staying in the existing final salary fund, albeit with current salaries taken as the new reference point and a 1% limit slapped on future pensionable salary increases. This seems a naturally more attractive option than leaving the defined benefit (DB) scheme for the new 'Life Plan' defined contribution (DC) scheme, which will become the only scheme open to new recruits.

These were the two options on the table when the BBC fund first proposed its deficit recovery plan in 2010 but concerns that the new DB arrangement would stymie ambition forced BBC bosses to put forward a third option. Director-general Mark Thompson explained in an email to staff:  "Many of you told us that you feared that the 1% cap might erode the pension you'd already built up in real terms (because your pensionable pay might grow more slowly than inflation) and that it would also mean that future salary growth (for instance through promotion) would not be fully reflected in pensionable pay."

A new career average plan was then put forward as a third option, which instinctively may attract workers expecting a future salary boost but is expected to offer a modest accrual rate of 1/60th of career average salary per year of service.

The net result of this says Gerry Morrissey, BECTU general secretary, is that "the key concern of members who have fed back to us relates to their desire for the BBC to fund independent financial advice. The BBC will not do this."

The union recently met BBC management to present its concerns and is encouraged that the corporation is willing to look at improving its internal communication on the looming pensions choice. Morrissey said: "Last week's meeting with senior management clarified the support options available to staff, such as the provision of group pensions seminars and the option for one-to-one advice. What also came across at the meeting is that some BBC staff are not consulting the (tools on the intranet) or attending a group pension seminar which means they are not in the best position to get the maximum from the one-to-one session."

Engaging the members to make a responsible decision appears vital, and the union boss added: "We'll be encouraging our members, as will the BBC, to make full use of the agreed support and will keep staff participation in this under review."

A BBC spokesperson reaffirmed to Pension Funds Insider the selection of advice on offer and added: "Many members who have already attended one-to-one sessions have found them of value in helping them better understand their current benefits, their choices for the future, the output from the online modeller and the key issues to be aware of. If after utilising all of the available support, members subsequently want advice, they will need to engage their own Independent Financial Advisor."

Plugging the gap

The options are being tabled to pension fund members just as the BBC confirmed that its overall pension deficit stands at some £1.6bn, down from an interim assessment of £2bn in 2010. Implementing the proposed reforms by the end of the year should wipe another £500m off the deficit, money which the BBC points out will then go into entertaining the British public via its programming.

Mark Thompson told staff that the deficit: "Remains a substantial sum, but the effect of the reforms is that half a billion pounds which would otherwise have had to be paid into the pension fund to reduce the deficit can instead be used on programmes and services for the public. Without the reforms, many hundreds of BBC jobs would have been lost."

Their pension recovery plan then schedules £900m in payments to be paid over ten years, which has led to some anger in the British mainstream media that licence fee money will go straight into plugging the BBC's pension hole. When asked if this was appropriate use of licence-payers money, the BBC spokesperson responded that pension commitments remain a vital part of its investment in the people needed to make its programmes.

dbillingham@wilmington.co.uk

First published 05.04.2011