Business

BBC pensions overhaul 'tough' says Mark Thompson

Mark Thompson
Image caption Mr Thompson says he knows the pensions move is 'painful'

The BBC's director general Mark Thompson has said overhauling the corporation's pension scheme is "by far the toughest thing we have had to do in recent years".

It comes days after the BBC announced plans to change its pension scheme in an attempt to tackle a £2bn deficit.

The proposals include closing the final-salary scheme to new joiners.

They also include imposing a cap on the amount pensionable salaries of existing members can grow by to 1% a year.

Mr Thompson also backed plans to publish stars' earnings in pay bands, but said revealing individual wages would be "wrong".

'Outside world'

The BBC's pensions moves are the first major changes by a publicly-funded organisation.

"We recognise this is painful, and it does mean a change from past expectations," Mr Thompson told the BBC's Andrew Marr Show.

"But look outside the doors of Television Centre and Broadcasting House at the rest of the world, at the public sector.

"Times are tough for everyone and pension arrangements, across the public sector, are going to be looked at very hard over the coming months."

He said there had already been "massive changes" in the private sector, and that across the UK final-salary schemes were increasingly being closed.

Mr Thompson said staff could ensure the contributions they had already made to the final-salary scheme would continue to rise in line with inflation by moving to join the BBC's new defined contribution scheme.

'Tough time'

Pension contributions currently take up 3.5% of the licence fee, but Mr Thompson said unless action was taken "it could very credibly become 10%".

"Although I think it is a difficult and tough time, it is no different than it is in many other institutions," he added.

"Everyone in the BBC has got to recognise that we cannot be exempt from a fundamental change in the British economy and in the expectations of the public."

The director general also said that the pension deficit - which he put at between £1.5bn and £2bn - had not been caused by poor management of the scheme.

And on staff pay, which was frozen last year and is subject to a constrained pay offer this year - Mr Thompson said "for the people who pay for the BBC, licence payers - their pay is very constrained as well".

'Pensions grab'

The government has ordered a review of public sector pensions, chaired by ex-Labour minister John Hutton.

The BBC has said the changes are needed to tackle the ballooning deficit in the pension scheme, which is now estimated at as much as £2bn, compared with £470m just two years ago.

Broadcasting union Bectu has condemned the proposals, which will be subject to a three-month consultation period.

And Jeremy Dear, general secretary of the National Union of Journalists (NUJ), has called the BBC's move "an audacious pensions grab".

Under the proposed changes, from 1 April 2011, an employee's pensionable salary will rise by no more than 1% a year, even if that employee gets a substantial pay rise.

From 1 December, members of the existing final-salary scheme will have the choice of continuing to contribute to it or of paying into a new defined-contribution plan.

However, no change is planned to the current BBC retirement age of 60.