Annual Review 2007/2008

Employees and remuneration

Pensions

Many BBC World Service employees are members of the BBC's pension schemes: the BBC Pension Scheme (a defined benefit scheme) and the Group Personal Pension Scheme (a defined contribution scheme).

BBC Pension Scheme

The BBC Pension Scheme provides salary-related pension benefits on a defined benefit basis from assets held in separate, trustee-administered, funds.

The scheme is subject to independent valuation by a professionally qualified actuary at least every three years, on the basis of which the actuary certifies the rate of employer's contributions. These, together with the specified contributions payable by employees and proceeds from the scheme's assets, are expected to be sufficient to fund the benefits payable under the scheme.

The most recent full actuarial valuation of the scheme was prepared as at 1 April 2007 by Watson Wyatt, consulting actuaries. At 1 April 2007, the actuarial value of the assets was sufficient to cover 103% of the benefits due to members, after allowing for expected future increases in earnings.

As a result of the 2007 actuarial valuation by Watson Wyatt, it has been agreed between the BBC and the pension scheme trustees that:

+ the employer contributions will increase to 19.35% from 1 July 2008. Employee contributions will rise from 6% to 6.75% from 1 April 2009 and to 7.5% from 1 April 2010, with employer contributions decreasing from 19.35% to 18.6% from 1 April 2009 and to 17.85% from 1 April 2010;

+ the additional payments are no longer required.

The next formal actuarial valuation is expected to be performed as at 1 April 2010.

  Projected Actual
Contribution rates 2009/10
%
2008/09
%
2007/08
%
2006/07
%
2005/06
%
Employer 18.6 18.8/19.35 18.8 7.5 6.0
Employee 6.75 6.0 6.0 5.5/6.0 5.5

BBC World Service, following the provisions within FRS 17: Retirement Benefits, accounts for the scheme as if it were a defined contribution scheme. This is because it is unable to identify its share of the underlying assets and liabilities of the scheme on a consistent and reasonable basis. The pension cost for this scheme therefore represents contributions payable by BBC World Service to the scheme and the costs amounted to £7.9 million in the year (2007: £3.1 million). In addition, contributions of £1.5 million had been prepaid in the year ending 31 March 2007 relating to this year bringing total contributions in the year to £9.4 million.

The actuarial valuation was updated for FRS 17 purposes to 31 March 2008 by Watson Wyatt, consulting actuaries. This valuation identified a surplus of £528.4 million in the scheme at 31 March 2008 (2007: surplus of £329.3 million as restated for the adoption of the Amendment to FRS 17). Additional disclosure about the scheme and its financial position under FRS17 is provided in the BBC Annual Report and Accounts that can be found at bbc.co.uk/annualreport.

Group Personal Pension Scheme and other schemes

The BBC also operates its own defined contribution pension schemes, including those operated in the USA and Australia. The pension cost represents contributions payable by BBC World Service to the funds and this amounted to £0.1 million in the year (2007: £0.1 million).