Settlement reached in BBC pensions dispute

In November 2010, the National Union of Journalists held a two-day strike at the BBC over proposed changes to staff pensions. Subsequent talks resulted in proposals to resolve the dispute. Unions have suspended the threat of industrial action pending the three-yearly revaluation of the pension scheme in July 2011. The number of pension deficits has grown in the UK and the strike illustrates the increasing prominence of pension issues in the country’s industrial relations.

Background to the strike

In July 2010, the British Broadcasting Corporation (BBC) announced a cap of 1% on increases in pensionable pay from April 2011, effectively ending the ‘final salary’ defined benefit pension scheme available to BBC staff. Mark Thompson, BBC Director General, stated that these were as necessary changes in response to a reported GBP 1.97 billion (€2.36 billion as at 13 January 2011) deficit in the pension fund. In response, the five trade unions representing BBC staff, the National Union of Journalists (NUJ), the Broadcasting, Entertainment, Cinematograph and Theatre Union (BECTU), the Musicians’ Union, Equity and Unite condemned the proposals, labelling the changes as ‘paying more for less’ and ‘robbery’ of current members’ pension contributions.

In October 2011, strike ballots resulted in a vote in favour of industrial action. This prompted further talks in which four of the five unions accepted revised proposals put forward by BBC management but the NUJ rejected the package.

NUJ action

The NUJ took action on 5 November with a 48-hour walkout and an indefinite work-to-rule. This led to the cancellation of Radio 4’s Today programme, while television news was unaffected; across other areas live broadcasts were substituted by pre-recorded material. Mr Thompson downplayed the action stating that ‘…much of the output of the BBC will be unaffected by this action’ and that the greatest inconvenience was caused to the corporation’s audience.

A second round of strikes planned for 15 and 16 November was avoided when the BBC and NUJ agreed to re-enter talks.

Agreement reached

Following talks at the Advisory, Conciliation and Arbitration Service (Acas), the two sides reached agreement on improved terms to resolve the dispute. Under these:

• the implementation of change will be deferred until the valuation of the pensions scheme is agreed between the BBC and its Trustees;

• there will be a new round of talks if the deficit is less than GBP 1.5 billion (€1.8 billion);

• the BBC will not seek to revalue pension contributions, fixed at the lower of either 4% or the level of inflation, until April 2017.

This agreement was endorsed by NUJ representatives on 7 December 2010. However, the unions state that further industrial action remains an option following the outcome of the triennial review of the pension scheme in July 2011. The dispute may resurface if the review shows the pension fund to have a deficit of less than GBP 1.5 billion.

Broader implications

The proposed changes to pensions at the BBC occur against a background of growing pension scheme deficits and regulatory reform (UK1004029I). The worst performance on record by pension funds occurred in 2009 and was linked to poor return on investment, raising concerns over the long-term survival of many schemes. This has led many private and public sector employers to close or convert final salary pension schemes to money purchase or career average schemes where employer contributions are significantly less, avoiding the problems of spiralling costs (UK0301109F). The Pensions Act 2008 aims to ensure that all employees have access to a pension scheme through either the new National Employment Savings Trust (NEST) or automatic enrolment in a workplace scheme. This legislation is expected to increase the number of people who have pensions. However, there is concern that it discourages provision of high-quality pensions, with employers favouring the basic provision that will be available through NEST.

Commentary

The changes to pension conditions set out by the BBC can be seen as part of a broader movement away from final salary pension schemes by employers. A perceived need to both ‘manage down’ liabilities and also reduce the deficit in many pension funds, coupled with an ageing population are key drivers for employers to change pension schemes. Across both private and public sectors it is anticipated that strike action will follow as employers switch from final salary pension schemes to alternative schemes (UK0301109F).

Following the latest round of talks with the BBC, unions are claiming success in negotiating changes to the original proposals for their pension scheme. The possibility of future strikes, however, remains in the event of a significant discrepancy between the BBC’s predicted pension deficit and that found by the triennial review in July 2011. The unions have not ruled out further action if the pension deficit is valued at less than GBP 1.5 billion.

Alex Wilson, IRRU, University of Warwick