BBC announces cap on final salary pension scheme
The BBC has become the first publicly funded organisation in the UK to announce changes to its final salary pension scheme which will limit the £2 billion deficit which has built up over time. The scheme will be closed to new entrants and the company will impose a cap of 1% a year on pension salary increases for existing members. This should, in due course, reduce the £2 billion deficit and allow the BBC to operate the pension scheme with more certainty and a much stricter financial straitjacket in the future.
Many believe that today's announcement by the BBC will be the first of many in the public sector which has attracted the attention and criticism of UK taxpayers - especially those employed by the private sector. It is common knowledge that final salary pension schemes are still popular in the public sector although the vast majority of the private sector schemes have been closed to new entrants or in many cases converted to money purchase schemes.
In simple terms, a money purchase scheme will see a member acquire some form of annuity or drawdown income from their pension pot upon retirement, but crucially there will be no guarantee of the income level. Final salary pension schemes are linked to the number of years service a member has accumulated and their salary upon retirement.
Share this..
Related stories
Conservative party plans increase in state pension age
The Conservative party has tonight announced plans to increase the state pension age from 65 to 66 years. If the party gains power at the next general election they would increase the state pension age from 2016 onwards as a way to combat the growing national debt in the UK. The announcement will be officially unveiled by George Osborne at tomorrow's party conference in a move which could save the...
Read MoreHow did the pension fund actuaries get it all so wrong?
The pension fund industry is a very complex monster and one which is proving very difficult to forecast in the short, medium and longer term. Only a few years ago it was revealed that government actuaries had in fact miscalculated, or wrongly estimated, the average lifespan of the UK population. While there was only a relatively small error between the actual figure and the estimates from some tim...
Read MoreIs your company pension scheme safe?
It has been revealed this weekend that a growing number of UK companies are reducing their contributions to staff pension funds in order to retain as much money on deposit as possible in these troubled times. This is a very tricky situation and one which is set to get more complicated as the recession rolls on. So is your pension at risk if your employer decides to reduce pension contributions?
One or More Pension?
The Basic State Pension is the one we're all probably most familiar with, and the one which most people in the UK are eligible for. You qualify for it through the payment of National Insurance Contributions you've made throughout your working life. But there are many other types of pensions available to you - and they will provide you with an additional income, and therefore a more comfortable...
Read MoreUniversity pension fund faces deficit of £10.5bn
28/10/2013 The Universities Superannuation Scheme (USS) is the biggest pension fund in the country, and was originally reported to be facing a deficit of £7.9bn, however, reports are suggesting that this deficit could actually be larger than originally reported. Analysis from pensions consultant John Ralfe has suggested that the shortfall could in fact be closer to £10.5bn, raising some co...
Read More