The BBC pension cuts yesterday will possibly cut the staff’s retirement funds by one-half. The action was declared ”dramatic” and “outrageous” by BBC workers and there has been a large demand for a strike ballot. The BBC’s CFO, Zarin Patel, stated there were no other options available to the company and the cut to the pension was necessary.
Due to the decline in asset values of BBC, the 2008 deficit of £470 million has grown to £2 billion. The change will make the pension scheme not be available to new workers at the end of the year. Existing workers can remain in the current pension scheme but the increase in pensionable pay will be capped by 1 per cent. This severely limits retirement funds. Under this proposal if a worker gets a 3 per cent pay raise only 1 per cent of the raise will be counted in the pension fund’s calculations. One 50 year old BBC worker estimated this change will cost their retirement to be reduced by almost £4,700 a year.
This step by BBC heralds in the news that public sector workers will be next. The demands of the pension scheme on the public sector is heavier than that in the private sector. Royal Mail, a part of the State sector, has already made changes. It is inevitable that the public sector will now see dramatic pension changes as well.
Ros Almann, a former No 10 pensions advisor, said of the BBC’s move: “This is the canary in the coal mine for the public sector. The writing is on the wall. These schemes are unfair and unaffordable, and public sector pension schemes have remained pretty much unchanged, unlike everybody else’s.”