The Court of Appeal has backed the BBC in the case of a long running pensions saga, after the television network imposed a 1 per cent cap on increases to pensionable salary in an effort to reduce its defined benefit deficit.
BBC Philharmonic Orchestra clarinettist John Bradbury was a member of the New Benefits section of the BBC pension.
Faced with a need to reduce its pension liabilities, the BBC decided to introduce a 1 per cent cap on increases in pensionable salary for the remaining active members of the Old Benefits, New Benefits and CAB 2006 sections.
This would mean that, whatever pay increase a member of those sections received, the increase in pensionable salary would be limited to 1 per cent in each year.
If a member did not agree to those terms, he would not get a pay increase.
If a member did agree, then the agreement would be binding so that the scheme’s trustees should give effect to it.
Mr Bradbury complained to the Pension Ombudsman that he had contributed to the Scheme in good faith on the basis that his pensionable salary was his basic salary.
The Pensions Ombudsman concluded that it was open to the BBC to determine that only part of Mr Bradbury’s basic pay was pensionable and dismissed the case.
Mr Bradbury appealed to the High Court.
But Mr Justice Warren held the BBC was entitled to make future pay increases subject to a condition that part of the increase would not form part of a scheme member’s pensionable salary and that this cap could properly be implemented via an agreement with the members.
The law firm Sackers commented: “This is a reassuring decision for employers who are considering or who have already taken similar action in respect of their pension schemes.”