The High Court in the UK has ruled that the BBC cannot modify its defined benefit (DB) pension scheme rules to cut future benefits for members of the scheme, although it can make other valid changes without employees' consent.

As reported by our sister publication Pensions Age, the judge rejected the BBC's claim that a rule in the pension trust deed which forbids alterations that adversely affect its members' "interests" applies only to benefits they have already accrued.

Instead, the judge found in favour of submissions from the pension scheme that "interests" must include anything that would leave members worse off, stating that the interests in scope have the potential to include a forward-looking element.

The BBC previously announced in May 2022 that, as part of its review of future pension provision, it was seeking clarification from the High Court on whether it might be possible to change future service benefits and/or member contributions for Active Members under the power of amendment in the scheme’s trust deed and rules and, if so, on what terms.

Commenting on the High Court’s ruling, a BBC Spokesperson said: "Like many organisations, the BBC is reviewing its pension options in the interests of both its staff and licence fee payers.

“We are committed to providing an industry-leading offer for all employees that is financially stable, fairer and more consistent whilst balancing this with the need to deliver value. No pension changes have been proposed at this stage.

"As the first step of this process, we sought clarification from the court in May on how the BBC’s DB pension scheme rules could be used to make changes. We are considering the judgment very carefully and the options available to us, including whether we have reasonable grounds to appeal the decision, which is not unusual in cases of this nature."

However, a spokesperson for the National Union of Journalists (NUJ) stated: "The court’s determination and clarification backs up the NUJ’s position that the pension scheme rules protect members from potential detrimental changes to benefits, and restrict the ability of the BBC to make changes that could lead to current and future members of the scheme being worse off in retirement.

"The NUJ hopes the BBC does not further waste licence fee money on an appeal to this decision. In the meantime, the union will reflect on the judgment with the NUJ’s legal team, and alongside the Representative Beneficiary’s legal advisors, as the BBC determines its next steps.

"The legal case is part of a wider ongoing pension review being carried out by the BBC. The NUJ will continue to liaise with the BBC and take part in any briefings or discussions over that process."

Commenting on the development, Arc Pensions Law legal director, Kris Weber, highlighted the ruling as a “good result for the lucky few current employees who are active members of the BBC's final salary pension scheme”, who will now continue earning those pensions.

However, Weber acknowledged that the ruling is “not-so-good news perhaps for other employees, freelancers, programme makers and others wanting a share of the BBC's limited resources, let alone licence-payers”.

Weber stated: "Wording in the scheme limits the employer's ability to stop paying a 42 per cent contribution rate, compared to the 7 or 8 per cent 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 scheme dates back to 1949 and it has a very restrictive amendment power, which wasn't uncommon in schemes of that era. Other schemes with similar wording will have to give careful thought to the implications. Some might have already made amendments in the past that are now called into question.

"Modern pension schemes set up since the 1990s give much more scope for trustees to agree to stop future accruals – restrictions on benefit changes based on nebulous concepts such as “interests” is much less common than in older schemes. In most private sector schemes closure to accrual happened years ago.

"The BBC will now have to decide whether to appeal. In the last round of litigation about how the BBC can limit its future pension costs, a visit to the Court of Appeal about capping pensionable salaries did pay off because the High Court's judgment in favour of a Mr Bradbury was overruled.”

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