The High Court has ruled that the British Broadcasting Corporation (BBC) cannot modify its £19.8 billion pension to cut future benefits for plan members but can make other changes without employees’ consent.
The case explored the treatment of future service benefits under the BBC pension scheme, which provides retirement benefits on a defined benefit (DB) basis for BBC employees who joined before 1 December 2010. There are four DB structures under the scheme, with the old benefits and new benefits categories of membership providing traditional 1/60th final salary benefits. Meanwhile, the remaining two career average benefit categories provide average salary benefits.
The BBC’s claim that a rule in the pension trust deed that forbids alterations that adversely affect its members’ interests was rejected, and found to only apply to already accrued benefits.
Justice Adam Johnson said: “As well as a hope of accruing future benefits, an active member also has a present right not to be subject to any change in the terms of the deed or rules which affects his position, otherwise than subject to the procedures contained in, and protections afforded by, the third Proviso. Those procedures and protections are designed precisely to ensure that such terms are not amended in a manner which affects him, unless the actuary confirms he is not substantially worse off as a result, or he is provided with suitable alternative benefits, or the active members as a group agree.”
Kris Weber, legal director at Arc Pensions Law, added: “This is a good result for the lucky few current employees who are active members of the BBC’s final salary pension scheme. Wording in the scheme limits the employer’s ability to stop paying a 42% contribution rate, compared to the 7 or 8% the BBC pays for more recent hires. The rules can’t be amended if it would substantially prejudice the interests of members. The High Court said that ending future accrual would breach that protection. The BBC will now have to decide whether to appeal.”