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Last Updated: Friday, 21 April 2006, 09:18 GMT 10:18 UK
BBC unveils pension reform plans
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The BBC will close its existing pension scheme to new staff
New BBC employees will be barred from joining the broadcaster's final salary pension scheme, under plans announced by management.

Instead new staff will have the option of joining a pension scheme where benefits are paid according to their average BBC career salary.

In addition, all pension benefits earned after 2016 will be paid at age 65, rather than 60 as at present.

Unions condemned the BBC's move as a "bitter blow" for staff.

Under the proposals, pension contributions will rise from 5.5% to 7.5% of salary for current scheme members from April 2007.

Doing nothing is not an option
Mark Thompson, BBC director general

There are further plans that contributions should rise to 9% of salary from April 2008, but this has yet to be given the green light by the scheme trustees.

Under the proposals, closing the final salary scheme to new entrants will take place this summer.

'Two-tier workforce'

BBC director general Mark Thompson said that the corporation's pension scheme faced numerous financial pressures, including longer life expectancy, lower investment returns and higher regulatory costs.

"The pressures on the scheme mean that for it to remain secure and affordable, we have to make some changes both to its benefits and to the level at which it is funded by the BBC and its members," said Mr Thompson.

"Doing nothing is not an option."

In response, the National Union of Journalists (NUJ) said the changes would come as a "bitter blow" and mean future staff being left worse off. The union has not ruled out a ballot for industrial action.

"The BBC will create a two-tier workforce, force some staff to work longer and expect all staff to pay more for the privilege of doing so," said Jeremy Dear, general secretary of the NUJ.

"What is clear is we will not accept attempts to make staff pay for the BBC's failure to properly fund the scheme."

BBC staff on strike
Unions have not ruled out the possibility of strike action

Mr Dear added that the BBC had been paying reduced contributions into the pension scheme since 1992.

Plans to raise the age at which pension benefits are paid - which would not take place until 2016 - would mean thousands of people currently under 50 would have to work an extra five years to receive a full pension.

BBC management will now consult scheme members, staff and trade unions over the proposed changes.

Some 20,000 BBC staff belong to the pension scheme, making it one of the biggest in the UK.

Rising costs

Final salary schemes promise to pay a retirement income based on a percentage of every year for the rest of life.

The level of income depends on how long you have spent working for your employer and how much you were earning at the time you gave up work - your final salary.

The BBC is the latest in a long line of employers to close its final salary scheme to new joiners.

Employers have found it increasingly hard to meet the costs of final salary schemes.

The problem has been blamed on people living longer and investment returns falling.


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