Another look at some figures

I’ve been getting some interesting emails from people who have been taking another look at the figures the BBC has released about the pension deficit, and the cost of covering it.

They make the point that looking forward the BBC is exaggerating the future scale of its liabilities. Since the final salary scheme was closed to new joiners in 2006, the really high cost members are an ever diminishing band. Sure, there’s the existing deficit, but you’ll have seen posts from me ad nauseum about how this could be dealt with, combined with Zarin Patel’s confession in Ariel 2 weeks ago.

These are the key figures.

Currently the BBC spends about £140 million a year on pensions

Under CAB 2011 that rises to £260-£265 million – the BBC says this is the maximum they are prepared to spend on pensions

Doing nothing would allegedly raise the cost to £350 million a year.

So let’s interrogate. That £350 million was based on a deficit of £1.5- £2 billion. But it won’t be this high, it’ll be between £1 and £2 billion. This will reduce the £350 million cost because the cost of paying off the deficit will be less.

Using non licence fee assets to offset the pension scheme loss would further reduce the deficit and therefore the £350 million figure.

Increasing the payback period from 10 years to 20 years would also reduce the £350 million figure.

Better people than me have done the maths, and when you add all this up the costs of sustaining the present scheme come in at £250 million: less than the cost of CAB 2011. And there is a good chance this figure would fall in the long term as the final salary members retire.

So why on Earth is the BBC pushing ahead with a more expensive scheme? Because in the long term their aim is not to sustain the cost of pensions, but to reduce them. And because they want to protect the BBC from cheap tabloid headlines about “gold plated pensions”. (Although we know that only the upper echelons of the BBC actually benefit from really fabulous pensions.)

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2 Responses to “Another look at some figures”

  1. Bill Law Says:

    To update yr BECTU defections list, I was BECTU and as of Nov 3 quit and applied to join NUJ. I thought the BECTU leadership was very poor and agree with you that effectively gthey were making the case on behalf of BBC management.

  2. The Telegraph gets it spectacularly wrong « Jonathan Renouf's BBC Pension Blog Says:

    […] without the brutal reduction in pension provision that the BBC is suggesting. Indeed, there is compelling evidence that retaining the existing benefits would cost about the same as the changes the BBC has suggested. […]

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