Today, the BBC Pension Trustees have published their interim funding check on the pension scheme. I would encourage all members of the pension scheme to read it. As the BBC's Chief Financial Officer I'd like to set out my thoughts on what it means for the BBC.
As the Chair of the Pension Trustees says in the report, this has been a difficult year for all pension schemes including the BBC's. In 2011, for example, Barclays, BT and the Universities Superannuation Scheme revealed funding deficits of Â£6.4bn, Â£4.1bn and Â£2.9bn respectively, and many other companies face similar challenges with increased deficits. With regard to the BBC scheme, market conditions, and in particular falling bond yields, have pushed up the value of scheme liabilities. As a result, in spite of the value of the scheme's assets rising, the overall funding deficit of the BBC scheme has increased to Â£2.6bn.
Firstly it is important to note that this is an interim funding check, not a full funding valuation. The next full valuation is due in 2013 and at that point the Pension Trustees and the BBC will, if necessary, agree a new schedule of contributions to address any deficit.
The Pension Trustees rightly recognise that the BBC's support for the scheme remains strong. We are fully committed to the deficit recovery plan agreed with the Pension Trustees following the 2010 valuation and have paid the first two years' extra contributions. Moreover the benefit reforms introduced in 2010 were done specifically to help ensure the long term sustainability of the scheme. Had those reforms not been implemented, we estimate that the deficit would now be around Â£750m higher. It is important to add that the BBC has no plans for any further reforms at this time.
The report also explains how the Pension Trustees have reduced the scheme's investment risk over the past year, with the ultimate aim of becoming less financially dependent on the BBC. The BBC supports this approach since it will help safeguard the scheme's long term future.
We will of course continue to keep the scheme's position under review and will engage fully with the Pension Trustees following the full funding valuation next year.
Zarin Patel is the Chief Financial Officer at the BBC