More details on senior management pensions

Further to my post yesterday, it’s worth explaining exactly how senior management pensions work. My understanding is that for those who moved into the scheme after 1989, their pensionable salary is capped, currently at £123600. This means that whatever their salary, their pensions will be calculated on the basis of this figure (if they’ve got 30 years of service this would generate a pension of 30/60 x 123600 or £61800). Of course it’s not quite that simple. Because this was so far below real salaries, remuneration packages have included – surprise, surprise – a series of “uplifts” to allow for the purchase of private pensions as well. But the significant point in terms of the BBC’s current proposals to butcher the staff final salary pension scheme is this: the pensionable salary cap rises in line with RPI inflation. And this is apparently written into the rules of the scheme. So whilst the rest of us will be subject to a cap on pensionable salary of a maximum of 1% a year, senior managers are guaranteed RPI inflation increases.

This has some interesting implications. Senior managers’ pensions increase whether wages go up or not. So whilst Mark Thompson has made a point of saying “there has never been a guarantee of inflation-proofing past accruals” (in his email to all staff), it now turns out this is only true for “ordinary” members of the pension scheme. Senior managers always have had inflation proofing of past accruals.

PS There is one further group of senior managers who deserve mention. These are the people who joined the scheme before 1989. There aren’t many of them, but boy are they the privileged ones (step forward Mark Byford, Alan Yentob). For them, there is no cap on pensionable salary. According to the Daily Telegraph that means if Mark Byford were to leave tomorrow then his pension would be calculated on the basis of his salary of £485000 a year, and be worth about £215000 a year. The same report quotes the BBC as saying that from now onwards he will be subject to the same 1% a year salary cap on pensionable salary as everyone else, but in the light of the rules written into the post 1989 senior managers’ scheme, I think it’s worth checking if this is really the case. If I get any more information, I’ll report back.

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