BBCPA Newsletter 2007

Packing up our flat the other day in preparation for our big move I started sorting through earlier years' paperwork and came upon the summary of the annual report for 2004 - at least I think it was 2004 but can't now check as 90 per cent of my life now seems to be in packing cases in surprising locations around the new place. What caught my eye was the reference by Jeremy Peat to the notion of “affordability” as applied to the BBC's contributions to the scheme. At the time the Association made the point that it would be odd for an employer paying at a rate about 20% of the full funding rate to talk about its contributions being unaffordable. Of course, what must have been in Jeremy Peat's mind was a worry that the BBC would jib at continuing to fund a pension promise at the full funding rate: a worry fully justified and now come to fruit. So the BBC's final salary scheme is closed to new entrants as of the end of October, and employees are instead being offered a career-average scheme, as described by Ian Pollock elsewhere in this issue. This will be considerably more “affordable” (bluntly, a lot cheaper).

The “old” scheme, with its old and new benefits, is in rude health despite its age. The actuary announced a tiny £13 million surplus as at March last year but since then everything has turned up trumps and a newspaper story had a quote from someone who must have been fairly close to Peter Dunscombe saying that the scheme was now fully funded: in other words had assets worth around £8.5 billion.

This being the case, it is a pity that the trustees and the BBC, when they look at the question of whether there should be a discretionary award for pensioners, will focus on the £13 million figure 18 months old and turn a blind eye to the contemporary situation.

At the meeting a couple of weeks ago with Jan Killick and Sandra Phillips I nonetheless made the case for a one-off payment for older pensioners, akin to the winter fuel payment from the Chancellor. There are two things which commend the one-off payment. First, it represents positive discrimination in favour of pensioners on the lowest pensions. Secondly, it recognises in a small way that recent increases in utility bills and council taxes have a disproportionate effect on the standard of living of pensioners: there is respectable research evidence, from Alliance Trust and elsewhere to this effect, suggesting that inflation for the over-75s is well above the headline rate.

Finally, over the course of the next nine months the trustees will need to consider what arrangements to put in place when the scheme's opt-out of the provisions in the old pensions legislation relating to the appointment of member-nominated trustees comes to an end. The relevant regulations require schemes which already have more than a third of member-nominated trustees not to make arrangements to reduce the proportion. The Association believes this is an opportunity for the trustees to recognise the changing proportions within the overall membership as between active members and pensioners and to provide for a second pensioner-elected trustee.

Tom Rivers .................Newsletter contents.......Home page

PENSIONS BILL 2006

The government's pensions bill was published on 29th November. It implements the proposals of the pensions White Paper which was itself a response to the recommendations of the Turner commission. It will make four important changes to the current state pension system.

• the number of years of national insurance contributions which are required to entitle an employee to a full state pension will be reduced. At present, a man needs 44 years of contributions and a woman 39 years. It is proposed that for both men and women the qualification should be reduced to 30 years. This will apply from 6th April 2010 and will affect those becoming entitled to state pensions from that date.

• those who are responsible for looking after children or someone sick or disabled will receive a Class 3 national insurance credit for each week in which they have such responsibilities. At present, people with so-called home responsibilities have their responsibilities recognised by having each full year during which they undertake their responsibilities deducted from the number of years required to acquire entitlement to the full basic state pension. So, for example, a mother entitled to child benefit for a child under 16 and who is the child's carer for the full 16 years would have the number of her qualifying years reduced from 39 to 23 but would still need to have the appropriate NI contributions for the remaining 23 years to get a full state pension in her own right. Under the proposed new arrangement, the mother would be credited with 16 years' worth of contributions towards the 30 years needed for a full pension. This new regime would be introduced from April 2010.

• as from a date to be announced at the beginning of the next parliament but not before April 2012 and not later than the end of the next parliament the basic state pension will be uprated annually in line with earnings rather than, as at present, in line with the increase in the retail price index.

• the age at which the state pension will be payable will rise from 60 to 65 for women over the ten year period from 2010 to 2020.Thereafter the qualifying age for all pensioners will rise by one year per decade between 2020 and 2050.

These first three of these changes will undoubtedly be of benefit to those who are affected by them and is predicted to reduce the number of pensioners who will need to rely on claiming pension credit. But as many commentators have remarked, the changes do nothing in the here and now for those of us who are already receiving a state pension. The delay of at least six and possibly nine years before the earnings link is restored means that the relative value of the state pension will suffer significant further erosion.

Tom Rivers .................Newsletter contents.......Home page

REGIONAL MEETINGS 2006

One of our aims in holding regional meetings is to keep in touch with members who find it difficult to get to our AGM in London . Another is to balance the BBC's reluctance now to hold more than one Pensioner Liaison Meeting a year by ourselves getting out to the regions. As Martin Cox reports elsewhere, this year's PLM was attended by only a few dozen - partly due to confusion over dates. So it was gratifying that this year the Association had good attendances at Guildford, Bristol and Birmingham .

In previous years a typical regional meeting has been a turn-up-and-hope-for-the-best kind of occasion for the Committee. Our problem is luring you to come. The AGM minutes give dates and venues, we ask Cardiff to send out reminder notes on the summer payslips and we get something in Prospero nearer the October dates. This has resulted attendances which have varied wildly from as many as 100 in Norwich to just a handful in Newcastle last year. But the AGM notice is a bit early and the BBC has reduced the numbers of pensioners getting regular monthly payslips. Prospero is a reliable stalwart, thanks to Editor, Peter Gearing (who was with us at Guildford ). But this year's well-attended and even-numbered meetings were probably swelled by Nick Whines ' new tactic - the targeted mailing of invitations. Thanks Nick.

GUILDFORD

If you know Guildford you'll know the attractive, pedestrianised main street and maybe the ancient, small but delightful Guildhall, which we booked because of the lack of any suitable local BBC premises. Tom Rivers and other committee members resisted the temptation to sit in splendid isolation in the magistrates' seats and we even abandoned the usual table between us and our visitors.

Tom explained why we exist as an organisation and that in our activities - though often seen as terrier-like by the BBC - we aim to be fair to the Corporation and the Scheme while watching out for our members' interests. Currently the scheme is healthy but some changes on the horizon are leading to uncertainty and concern.

The meeting demonstrated that today's pensioners are not just interested about their own pension income but the pension landscape in general - often because of concerns for their children. Mike Bunting and Susan Thorne were concerned about the future of the State and the BBC schemes and at the age at which pensions would be received in future. The BBC's abandonment of its final salary scheme to new members and the introduction of a career-average arrangement raised issues about future funding for the current scheme. How will the two systems be managed? Currently the plan is for the same trustees to administer both schemes. Will there be conflicts of interest if one scheme or the other runs into difficulties? Secondly, what about the changes at the top of the BBC where the Governors are being replaced by the new BBC Trust? Who will sit on the pension Trustee Board? Members felt that the BBC was changing so much (Resources to be sold off next year; massive redundancies elsewhere and the contract culture) that even its own existence might be in jeopardy - so what happens to the pension fund then? More questions than answers, but Tom emphasised that we are a privileged cohort with a scheme currently in actuarial surplus and getting in more income than it pays out. However, to maintain long-term viability, the BBC's own contribution and active members' contributions will have to be steeply increased.

Sid Beckett raised the issue of the recent revelation about maladministration of the levelling option for a few pensioners (see page 8) and which affected him personally. Tom emphasised that the Association was trying to be fair to the BBC over their proposed solution to the problem but some cases - like Sid's - might need to be looked at more sympathetically than the BBC was prepared to do, and the Association would hope to advise individuals if, when and how to appeal to the Occupational Pension Advisory Association or even the Pensions Ombudsman.

BRISTOL

Our second meeting was at BBC Bristol - again well attended. Similar issues were raised: the levelling option; what might happen if the Charter was not renewed or the license increased by a much lower figure than the BBC asked for? Are we being given misleading information about the solvency of the Fund by an over-optimistic Watson Wyatt? And how do changing BBC staff structures (shorter length of service, senior management being parachuted in and out, and so forth) have an impact on the scheme?

BIRMINGHAM

The Birmingham meeting illustrated the changing ambience of the BBC rather well. It was held in the newly opened Mail Box - a soulless building, I thought, tucked away at the back and on the top floor of a rather up-market shopping mall. No-one at the meeting (refugees no-doubt from the unfashionably distant Pebble Mill) had a word to say in favour of it. Getting in was difficult since the otherwise very friendly local receptionists didn't seem to accept the retired BBC staff passes (something we've subsequently taken up with BBC management) and there were the inevitable, unwelcoming barrier of the now ubiquitous revolving glass doors (access only by electronic key swipe) which surely must be safety hazard if the building has to be evacuated quickly. Everyone working in the building seemed to be 'hot desking' and the only lift was a funereally slow, disability-access affair. Our meeting was in a windowless conference room, comfortable enough and well-stocked with white boards and video monitors but booked and serviced by an impersonal out-sourced facilities management department in Manchester . Although the tea and biscuits were no doubt sourced locally - it seems unlikely they were flown from Manchester - they could only be booked through the appropriate charge code number. Fortunately we had remembered to obtain this from the Birmingahm HR department before it was - seemingly - abolished earlier in the year.

Discussion was lively and covered similar topics to the other meetings. There were enthusiastic endorsements of the Association but a feeling that we should be more aggressive in attracting members - though there were few ideas about how this could be achieved given our lack of access to the Cardiff address lists. Birmingham ex-staff obviously had enormous esprit de corps and were clearly glad to meet each other. Indeed a change in tactics over the timing of the arrival of the tea and biscuits (maybe fresh from Manchester , they arrived in the middle of the meeting rather than at the end) meant that socialising took over from the earlier discussion of issues. And who were we to object?

David Allen .................Newsletter contents.......Home page

PENSIONER LIAISON MEETING 2006

Attendance at this meeting has been drifting downwards during the last few years and only 46 pensioners were at White City on 3rd October. A pity, because the meeting was an interesting one.

Jan Killick, Head of Pensions, gave the latest facts and figures. There are about 57,000 members of the scheme - 20,000 pensioners, 17,000 deferreds, and 20,000 active members who are still contributing. The scheme has a surplus, albeit a tiny one, at a time when most schemes are in deficit. Increased longevity remains a problem for the scheme, if not for the pensioners themselves. In 2002, a male BBC pensioner aged 60 could expect to live for another 22.0 years. That figure is now 23.5 years. For women, it was 24.5 years in 2002 and 25.7 years in 2005. These are the sort of figures which cause sleepless nights for actuaries and fund managers.

To keep the scheme's finances healthy, contribution rates are to be increased. Jan Killick explained that the BBC contribution would rise from 7.5% in April 2006 to 17.3% in April 2007. For contributing members the increase would be from 6.0% in September 2006 to 7.5% in September 2007 and then to 9.0% in April 2008.

She thought that 2006 had been a year of relative calm for most BBC pensioners. Much of her department's work has been about non-pensioners… support and advice for employees in areas being sold off or outsourced, pension estimates for the redundant, explanation about the higher contribution rates, planning for the new career-average scheme for future BBC employees.

The next speaker was Geoff Jones , who talked about his first year as the pensioner -elected Trustee. He said he had been on a steep learning curve, with much training and many meetings. He had particularly enjoyed one session for new trustees from 40 companies; 39 of them represented schemes which were in deficit. Only the BBC scheme had a surplus.

He discussed the problem with the levelling option, when 103 pensioners had been paid too much. The trustees had a duty to recover the over-payments, but Geoff Jones was confident that Cardiff were dealing with hardship cases in a sensitive way.

Finally, it was Peter Dunscombe's turn. He is the Head of BBC pension investments and he told a cheerful story. The fund's value was £7,820 million at the end of the last financial year. It may be higher now, because the stock market has continued to do well and equities account for more than 70% of the fund's assets. Most of the rest is in fixed interest securities (13.6%) or property (11.4%).

The five largest equity holdings are in BP, HSBC, Rio Tinto, GlaxoSmithKline and Vodafone. These are huge global companies whose activities are often socially or environmentally controversial. Peter Dunscombe said that the BBC Pension Scheme has now signed up to the principles for responsible investment developed by the United Nations and leading global investors. The trustees have appointed a specialist company called Hermes to work with our individual fund managers and to coordinate policy at company meetings all over the world.

So, an interesting meeting but a disappointing turn-out. The Association strongly believes that pensioners should make the most of this annual opportunity to ask awkward questions about the scheme and its investment policies. Perhaps the low attendance was because things are running smoothly at the moment. Perhaps the White City venue is a deterrent. We will argue that the meeting should continue, that it should be better publicised and that it should be held in Central London . But our task would be easier if more of you put the date in your diaries.

Martin Cox .................Newsletter contents.......Home page

MEMBERSHIP SECRETARY'S REPORT FOR 2006

It's hard to believe a whole year has passed since I sat down to write my first Membership Secretary's report. Last December I can remember staring out through the window by my desk in the spare room at where the garden had once been. On one side a large deep hole was gradually filling with rain water. On the other side a bright yellow excavator was perched precariously on the top of a mound of soil. Work had finally started on my new home office cum study cum play room and had reached the depressingly mucky stage.

Twelve months on I sit snug in my spacious new accommodation looking out over the restored garden. After years working in decidedly cramped quarters the effect is brilliant. True the grey December rain remains the same but even that I view with some satisfaction because it's all feeding into my newly installed rain water harvesting system. Come the next drought I shall be ready. Whether these home improvements will ultimately make me a more efficient Secretary I rather doubt. But I shall have fewer excuses. So on with my report.

First can I say a big thank you to all those members who have written in with thanks and good wishes for the work of the Committee. It's always lovely to hear from members and even those with complaints. Next can I thank those who have remembered to update their details and notify me of changes of address. I remain concerned about the number of letters to members which come winging back to me with 'not known at this address' added to the envelope. You will find a form to update your details on the bottom of the letter accompanying this newsletter. Using the form helps me a lot because it contains your membership number which enables me to identify you much more quickly. I am always surprised by how many members have similar or even identical names. Please don't bother to return the form if nothing has changed.

My next thank you is addressed to all the members who have responded to my 'gentle reminders' that their subs are overdue. Magnificent! It has kept a smile on Alan Bilyard's face all year as the lost sheep have steadily returned to the fully paid-up fold. However in my enthusiasm to improve the Association's finances I may have overdone the reminders. A number of members whose consciences are of the most tender variety and too easily pricked have been sending me additional subscriptions and frequently more than once!

To ease matters for the forgetful and the perennially guilty I have included a reminder in the covering letter. If you have no reminder you may happily relax until May 2007.

Of course you can ask your bank to take the strain of remembering by setting up a standing order in favour of the Association as many of you do. Drop me a note and I will send you a form for you to complete and send on to your bank. The form is also available on our website at www.bbcpa.org.uk The Association's postal address is

BBCPA, PO BOX 230 , Alton , Hants GU34 9AR

Can I take the opportunity to remind Life Members and Honorary Life Members (you should find an 'L' or 'HL' after your membership number) that membership is free. Some Life Members have opted to continue to pay a subscription. This is very much appreciated by the Association as are any donations, but it is not expected.

Once you have reached your 75th birthday you are entitled to apply for Life Membership for a final payment of £35.00. As life expectancy continues to grow this must be a bargain! It has been suggested to me by a member of the Association that members could pay a larger lump sum before they are 75. There is logic in this but I may get confused with my record keeping because it effectively introduces another category of membership. I will mull on it.

Recruitment remains a major concern for the Association and I would urge all members to help by persuading ex-colleagues to join. If you send me names and addresses I would be happy to send out a personal letter and recruiting leaflet. Thanks are due to several members who organise local groups of ex-BBC staff for supporting the Association by making information available. If you belong to such a group please let me know and I will send you some leaflets to distribute.

Cardiff continues to support the Association by including details of our meetings and contact address on the pension advice slips.

We have continued to run our regular advert in Prospero and occasional ads in Ariel. Prospero continues to give the Association generous editorial coverage but unfortunately at the moment does not go out to all pensioners. If you do not receive Prospero and would like to, all you have to do is call the Pension's Helpline on 0845 3004505 and ask for your name to be added to the mailing list. It's always an interesting read.

2006 has been a good year for recruitment with very nearly one hundred new members. This is well up on the last two years but barely balances the loss of members over the same period. There is certainly room to do better given the potential number of new members each year as staff retire.

At the end of November the Association had over 3000 members.

A major source of frustration is our inability to contact staff at the point and time of retirement. I would like the Association to be in the position to write to all ex-staff as they start taking their pension, to wish them well and to invite them to join. Because of data protection requirements, this obviously requires the co-operation of either the Pension Fund Trustees or the BBC's Personnel/ Human Resources/People Department. So far this co-operation has not been forthcoming. The Trustees are reluctant to accord the Association any special or favoured status while the BBC has undergone a number of staff changes at senior level which has made putting our case very difficult. The best we can do at the moment is to make leaflets available at retirement conferences.

I would certainly welcome suggestions from members on the question of recruitment.

Perhaps not surprisingly it is noticeable that the majority of new members are providing email addresses. It is therefore very likely that in future the Association's website will become a much more significant part of the Association's activity both with regard to recruitment and the provision of information. Some members have already expressed an interest in receiving this newsletter electronically.

The Association therefore plans to update and improve the look and function of our website early in the New Year. I would welcome suggestions for what the site might include and sites to which it might usefully link. For example it should be possible to provide forms which can be sent direct to my computer to update your details, set up standing orders or enrol new members. The internet has shown itself to be a powerful tool for reuniting old friends. Might the Association's website have a role here? I suspect I can hear the low growls of complaint from at least some of the membership who plan never to let a computer disturb the equanimity of their home. Given the days of pain and anguish my non- functioning computer has caused me over the last 12 months they may well have a point. Nevertheless the technology is here for the foreseeable future and the Association should aim to use it to best advantage. People frequently change their email address and forms rarely provide enough room for email addresses to be included legibly. It would be helpful to receive emails from members confirming their current email address. It would also help enormously if you put 'BBCPA' in the subject box to help distinguish it from spam. Please use the email address membership@bbcpa.org.uk .

Nick Whines ................Newsletter contents.......Home page

THE LEVELLING OPTION

The most significant event of the year for a small number of members occurred in June when they received a disturbing letter from Jan Killick, Head of Pensions. The letter explained that when they retired they had taken advantage of the so called levelling option which aims to even out the amount income received by a pensioner up to the age when they can take the state pension. To begin with their BBC pension is enhanced. Then when the pensioner reaches 60 or 65 and their state pension comes into payment their BBC pension reverts back to their actual entitlement and a further deduction is made to 'pay back' the enhancement they received earlier. This deduction continues until they are 75.

Unfortunately at some point in the past, probably when records were being computerised an error was made in the case of just over 100 pensioners. The effect was that the enhancement continued to be paid after the time when it should have stopped and no deductions were made. Once the error was discovered earlier this year the Trustees had no option but to write to those affected by the error to explain that their pensions would in the autumn have to revert to their entitlement and that in addition deductions would start and continue for ten years (15 in the case of women) as per the original agreement that the pensioners had signed up for. The Trustees agreed to waive the repayment of the over payment made since the pensioner reached state retirement age.

A number of pensioners contacted the Association upon receipt of the letter from Jan. Some were furiously angry, some confused and upset and some in tears. Not surprising perhaps as one pensioner found her gross pension cut by almost a third.

This has not been an easy situation to deal with as you can imagine. All the pensioners involved signed up to the agreement and to date have benefited from the error by thousands of pounds.

Some of those affected have agreed that they were aware of the overpayment. Some in the past drew attention to the overpayment but were reassured that they were receiving the correct amount. Some as far as I can judge from some lengthy conversations were completely ignorant of what the levelling option involved. For this group the letter announcing the reduction in their pension came as a very unpleasant, one might almost say devastating, shock. Some members had recently taken out mortgages or other loans. Some were going through divorce with all its financial implications. Some were contemplating expensive operations. Given that most people on fixed incomes adjust their lifestyle and expenditure accordingly, finding ways to accommodate a reduction in that income was never going to be easy.

Beyond providing a sympathetic ear the Association has been limited in the extent it could support affected members because clearly the Trustees had a legal obligation to correct any error in paying out pensions and to recover money that was due to the Fund. The Trustees agreed to look at hardship cases and the Association therefore encouraged some members to claim hardship. This involved completing financial declaration forms and providing details of expenditure. This was not popular. Nevertheless it was only by individual pensioners biting the bullet and providing evidence of hardship that the Trustees could consider their cases.

My understanding is that in several instances the Trustees have accepted that hardship has been demonstrated and that in these cases repayments have been reduced or waived.

The Association continues to argue that the period of repayment should not extend beyond the age of 80. So far this view has not prevailed with the Trustees. However the Trustees have confirmed that were a member to die before completing the repayments, the 'debt' would die with them and not affect the pension of any dependent.

I would like to think that, within its own definition of hardship, the Trustees have located and dealt with all the genuine hardship cases arising from the error. However as this has depended on pensioners coming forward and providing evidence it may well be the case that some people are suffering the effects of the reduction of their pension in silence. If there are members of the Association who are affected by this issue and who have not responded to Jan Killick's letter I would urge them at least to contact the Association and discuss their situation.

Alternatively some members have found the Pensions Advisory Service (TPAS) very helpful as I have found myself when trying to clarify the situation in my own mind. The Pensions Advisory Service, is an independent non-profit organisation that provides free information, advice and guidance on the whole spectrum of pensions covering State, company, personal and stakeholder schemes.Their helpline is 0845 601 2923 and their email address is http://www.pensionsadvisoryservice.org.uk/

TPAS provides a gateway to the Pensions Ombudsman who can look at individual cases of grievance once the internal dispute resolution procedure has been exhausted. Or in other words when you don't accept the decision of the trustees.

I have heard the view expressed, and it may well be one with which you have some sympathy, that pensioners must have known they were being overpaid. I reject this view. My conversations convince me that some pensioners had no real idea what they were signing up to and even less seven or eight years later. Some clearly relied heavily on the advice of personnel officers. Others were in a distressed condition at the time of signing. While the levelling option continues to be very useful for individuals in certain specific circumstances, good advice and guidance remain essential and the Association will continue to press for clarity in the information provided by the Pension Fund about the option.

Finally I think it is important to say that those who man the Helpline and who administer the Pension Fund on a day to day basis were themselves I believe very shocked by the discovery of the error and the problems and distress it caused for a number of individuals. My observation is that, within the limitations agreed by the Trustees, they have worked hard to deal sympathetically and in a kindly fashion with those affected by the mistake.

Nick Whines - Membership Secretary

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TREASURER'S REPORT

On the positive side our income is up on last year and it looks as if we will slightly exceed what it was two years ago. Most of the recovery is due to the hard work by our membership secretary, Nick Whines , in gathering up outstanding subscription arrears and some is due to new members joining for the first time. Our expenditure has maintained a similar level to previous years and therefore I am expecting a greater surplus for this year. Despite rising costs such as postage, which is a considerable expense for us, we are pleased with this outcome.

Obviously we are not a profit making organization and so any surpluses eventually will be transferred to our reserve account which at the moment stands at £38,000. The purpose of this reserve account is to meet any future expenditure which might be incurred in respect of professional advice that the Association may seek in relation to the running of the BBC pension scheme or for any other unexpected costs that may arise.

This year's expected surplus may also be used towards the costs of re-vamping our website the appearance of which is now considered to be out of date, and also towards the re-design costs of our house style on letterheads, leaflets and other communicating papers.

Whilst we are doing our best to control costs, we are expecting that next year's expenses will exceed those of this year which could lead to a deficit being incurred. We need to increase our income to offset this effect. We have to recruit new members to help us realize this but, of course, the benefits of increasing our membership numbers are more important as this will make the Association a more influential body when it meets with the BBC and other pension associations. So we hope to devise an effective recruitment campaign during the coming year which will also incur additional costs.

Therefore, the year for 2006 should end with some degree of financial success and promise for next year which we will discuss in more detail in the annual report next February.

Alan Bilyard - Hon. Treasurer

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BBCPA NEWSLETTER January 2007

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FROM THE CHAIRMAN