News, Culture & Society

BBC pension black hole will swallow a tenth of licence fee

The BBC is facing a huge pensions crisis that will take up nearly a tenth of the £174 licence fee next year.

The broadcaster sank £100million of public money into its pension fund in 2016 to try to plug its yawning £1.8billion black hole.

But that annual payment will jump to £340million in 2018 – slightly less than a tenth of the income from 26million TV licences.

In the past the BBC has tackled its pension deficit by getting rid of its gold-plated pension deals. But it has now run out of options and will load the cost on to the public.

The BBC is facing a huge pensions crisis that will take up nearly a tenth of the £174 licence fee next year

The broadcaster admitted in its latest annual report that it will have to pay in £2.37billion over the next 11 years.

The problem is getting worse as retiring staff live longer and the BBC counts the cost of years of empire building.

The broadcaster spent the 1990s and 2000s expanding furiously, launching its gargantuan website, new digital radio stations and the recently closed BBC3 ‘yoof’ television channel.

But it now has to fund the retirements of the staff it hired and promoted – many of them on gold-plated ‘final salary’ pensions. These schemes give workers a huge pay-out every year – often around two-thirds of their annual salary at the point that they retire.

Many of the BBC’s nearly 20,000 former workers collecting ‘final salary’ pensions will receive six-figure sums.

The corporation has around 3,500 current staff able to collect final salary pensions when they retire, it is understood.

The number may include star news presenters such as Sophie Raworth, who joined the BBC decades ago. She earns up to £200,000, according to the BBC ‘rich list’ published last month.

Look who’s cashing in 

Pensioner: Alan Yentob

Pensioner: Alan Yentob

Former BBC creative director Alan Yentob’s pension is at least £216,667 a year, analysts calculated in 2010.

The 70-year-old joined the BBC trainee scheme in 1968, nearly three decades before the broadcaster closed its generous final salary pension scheme to new members in 2006.

He was ousted from his £183,000-a-year post in 2015 but remains on the books as a presenter, earning up to £250,000 a year for his Imagine arts programme.

Meanwhile, ex-deputy director general Mark Byford has one of the biggest pensions in the public sector with at least £229,500 a year, according to analysts – although others say it is closer to £400,000. He joined long before the pension reforms and reached a salary of £435,000 a year.


Other beneficiaries are thought to include sports boss Barbara Slater, who joined the BBC in the early Eighties and now receives £207,800, and Alan Yentob, the controversial former creative director, who joined in 1968 and is expected to get a pension of £220,000 a year.

The BBC closed its final salary pension scheme to new members in 2006, following in the footsteps of most private sector and some public sector organisations which realised the policies were unsustainable. This created a rich-poor divide in the BBC between those who joined before and after that date.

The corporation set extra limits on its final salary pensions schemes in 2010.

Those who joined after 1989 and were awarded a large pay rise after 2010 missed out on an equivalent increase in their pension. Pay-outs were also capped at just over £150,000 and new staff were put on less generous pension schemes.

The BBC’s then finance chief Zarin Patel said at the time it was the only way to deal with the pensions black hole – which at that point stood at £2billion – without placing ‘a new burden on the licence fee payer’. But the public is now being forced to foot the bill.

Meanwhile, the BBC’s auditor has warned the deficit was ‘significant’ and there was likely to be an ‘impact’ on licence fee payers and BBC pensioners. The problem is made worse by the fact many staff are allowed to retire with their full pension at 60. The BBC only raised its retirement age to 65 in 2006.

A BBC spokesman said: ‘The BBC is no different to many organisations in having a deficit in its pension scheme caused by external market factors.

‘Most talent are not BBC staff so are not entitled to a BBC pension.’ Miss Raworth, Miss Slater and Mr Yentob all declined to comment.