BBC to pour £1.7bn into pensions black hole

[dutchman]

Broadcaster plunged into crisis by gold-plated pensions handed to staff



The BBC is facing a £1.7bn bill triggered by gold-plated pensions handed to staff including top stars and executives.

The broadcaster has been plunged into a financial crisis and has admitted in documents seen by the Telegraph that its pensions bill is “not justifiable”.

Executives have warned that the spiralling costs are limiting investment in programming.

The black hole in the BBC’s finances is now so great that it is locked in a legal battle in an attempt to reduce the pension payouts. The corporation has already put aside £1.7bn to plug the gap – more than the cost of BBC One and Two content last year, and a cost of around £70 for every licence fee payer.

BBC employees who joined before 2010 were offered retirement packages which rise in line with inflation and allow retirement at 60, six years before the state pension age. The cost of funding the pensions is now equivalent to almost half the salaries of those staff.

Over the past two decades the BBC has faced controversy over soaring salaries paid to stars and top executives. These pay packages are now ramping up the cost of staff pensions.

The broadcaster’s generous defined benefit pension scheme funds the retirement of a generation of BBC veterans, including former director generals George Entwistle, who resigned in the wake of the Jimmy Savile sex abuse scandal, and Greg Dyke, who quit following an inquiry into the death of Dr David Kelly.

Current stars who joined the corporation before 2010 are also eligible for the scheme, including Laura Kuenssberg and Sir David Attenborough.

In court documents seen by the Telegraph, the BBC’s chief operating officer Leigh Tavaziva said: “The sums having to be spent to continue defined benefit provision are necessarily limiting the resources available to the BBC to fund content and services, or employee reward more broadly.

“The pension costs faced by the BBC are not justifiable in the context of its income level and the UK economic climate.”

She said that the BBC “cannot expect the Government to require licence fee payers to pay more to cover the cost of pensions”, adding: “To my knowledge, the BBC is the only major media or technology organisation that has its defined benefit pension scheme open to accrual.”

Last year the BBC paid an effective contribution rate of 42.3pc of staff salary into the old scheme, the highest level since it was established in the 1940s and nearly triple the rate in 2010.

The generous scheme guarantees an inflation-linked retirement income for life. A BBC employee in the scheme could be entitled to two-thirds of their final salary when they reach retirement. This income would then rise each year in line with inflation, up to a limit of 10pc.

Nearly 7,000 staff are still paying into the old pension scheme at the BBC. But a gap between the scheme’s assets and liabilities means licence fee payers have to contribute millions each year to the BBC’s “deficit payment plan” to help it balance its books.

From March 2022 to the end of 2028, the BBC plans to pay a total £1.7 billion.