The newspaper for BBC pensioners – with highlights from Ariel online Beechgrove celebrates 50 years of TV A look back at the Aberdeen studio – page 10 December 2012 • Issue 8 Sailing on doing time a busy year for Emley Moor? with the bbC North 3 Page 9 Page 11 Page 12 NEWS • MEMoriES • ClaSSifiEdS • Your lEttErS • obituariES • CroSPEro 02 bbC PENSioNS Creation of new CEO role for BBC Pension Scheme ‘a milestone event’ A former BBC Pensions employee, Joy Moore, has been appointed as the first Chief Executive Officer (CEO) of the BBC Pension Scheme. Joy will take up her position on 7 January (NAPF) Retirement Policy Council. I am very business of the Scheme. The Trustees meet between those provided to the BBC from 2013. She will have overall responsibility pleased that she is joining us again in what I only six times a year (aside from more regular those required by the Trustees – creating for managing the Scheme on behalf of the think is a key appointment.’ committee meetings), so there is a limited the new post of Chief Executive Officer. Trustees and will report to the Chair of the Geoff described her appointment – period when the whole Board is in session.’ The main role of the CEO is to ensure Trustee Board. and the creation of the CEO role – as Jan Killick, the previous Head of Pensions, the effective execution of Trustee policy, Geoff Jones, the Scheme’s current an important milestone for the BBC supported the BBC on policy, strategy and compliance with legal requirements and best pensioner-elected Trustee, told Prospero: Pension Scheme. funding issues and was also responsible practice, to manage the Scheme relationship ‘Joy was my deputy when I headed up the ‘With 65,000 members and over £9 billion for administration and payroll services, with the BBC, to represent the Scheme to Pension and Benefits Centre in Cardiff. She in assets, our scheme is one of the largest communications, risk management and the Pensions Regulator and other statutory left the BBC in 2001 and is well respected in occupational pension schemes in the UK. secretarial support to the Trustees. When bodies, and to give a lead to the executive the pensions industry, having been chair of ‘It is therefore not practical, nor desirable, she left earlier this year, the Trustees decided team, ensuring the effective coordination the National Association of Pension Fund’s for the Trustees to run the day-to-day to seize the moment and split the duties of all activities. valuation, when we will see what shortfall is in thing today, you get a yield of about 2.5%.’ more risk than a government bond but Locking place at that time and what needs to be done ‘These are not conditions that are with a better return. They have identified to remove it.’ conducive to generating very strong returns some opportunities in the property and During the year, the Trustees reviewed on investments – but there may be some infrastructure markets. down risk many of the services provided to pensioners reasons to be optimistic. ‘An example is a purchase made by one – among them Prospero (which is sent ‘Despite all the doom and gloom, the of our property managers – CBRE Global This year, fifty people attended the out to around 10,000 pensioners) and the Scheme’s asset level of around £9.2bn Investors – of a development of holiday BBC Pensioner Liaison Meeting (held in Volunteer Visitor Scheme. The Board agreed is higher than it has ever been, and the homes in the UK, where the Scheme has November), where they had an opportunity to continue with both arrangements, albeit Scheme’s three-year annualised return from acquired a ground rent interest. That pays a to hear from and put questions to the team reducing the number of editions of Prospero the depressed levels of 2009 has been yield on our investment of around 4% a year. running the BBC Pension Scheme: interim from nine to six per year. 13.8%, so assets have increased by almost If at any point the ground rent isn’t paid, the head of pensions James Hacker, director Geoff Jones then went on to talk about 50% over last three years.’ property would revert to the Scheme.’ of pension investments James Duberly and people changes and Scheme governance The Trustees are also discussing ways pensioner-elected Trustee, Geoff Jones. (covered in the article above), and then both Lock down that the Scheme can get involved in James Hacker provided a brief update James and Geoff answered some questions However, as James put it, ‘the value of the infrastructure projects, as mooted by the on the Scheme and what has happened from the audience. assets is only one part of the story… It’s the government recently. ‘Infrastructure hasn’t over the past year (much of it covered in value of the Scheme’s liabilities that also need really worked for pension funds in the the summary members’ report, which you Investments to be taken into account.’ past because of high costs and gearing, should have received in September). In his first address to the Pensioner Liaison As part of their long-term investment He made the point that the value of the but pension funds are seeking to develop Meeting since joining the BBC in 2011, strategy, the Trustees have introduced a Scheme’s assets is now at a record high a structure that would better meet their James Duberly’s investment presentation liability driven investment programme. ‘In the of around £9.3 billion. Its income (of around needs, where embedded leverage, fees covered four key themes: risk reduction; past, people might have managed the assets and risks are relatively low, but with a higher £0.5 billion) comes from investment returns responsible investments; looking for without thinking about the liabilities, but we prospective return than government bonds.’ and contributions, whilst the lion’s share of investments with long-term, inflation-linked want to be cognisant about how the two James ended with a mention of the its expenditure is pensions (amounting to cash flows; and fees and costs. are moving together. We look to buy assets Scheme’s costs: the biggest cost to the £0.3 billion in 2011/12). He started off by reviewing the current with very certain cashflows a long time in Scheme is asset manager fees (another topical The next full valuation of the Scheme will economic situation and commented that the future, that deliver a known amount of issue!) The Trustees have been reviewing look at the Scheme’s assets and liabilities as we see a lot of bad news in the media, with money to pay a known benefit. In that way, the fees paid to managers, have negotiated at 1 April 2013. ‘It can be a long process in phrases like ‘quantitative easing’, ‘eurozone we can lock down some of the exposure of reductions and ensure that any new manager terms of identifying what the expected liabilities crisis’ and ‘the new normal’ highlighting the the Scheme and the sponsor to increasing are, and then there is a period of negotiation difficult economic situation we find ourselves in. assignments are made at competitive rates. between the Trustees and the BBC on how James showed the audience two charts – liabilities and investment uncertainty. The result is a material reduction in the to remove the shortfall. Based on previous one of the FTSE100 index going back to the ‘The trouble is that the yields on those very overall costs of managing the Scheme as a experiences, we expect those discussions mid-80s, and another showing bond yields secure investments, such as government percentage of the Scheme’s assets. to run through 2013 and to be finalised and over that time. bonds, are very low – so to what extent do ‘But at the end of the day, we have to communicated early 2014,’ he said. ‘In equity markets, the peak came in 1999, we want to reduce risk but give up returns think about value for money We continue to Following the last full valuation in 2010, and although we have made some recovery that might be achieved? There’s a balance be guided by the principle that what really the BBC agreed a schedule of additional over the last year or two, we are still at lower that needs to be achieved.’ matters is investment performance after fees; contributions to ‘plug’ the shortfall identified market levels than we had 13 years ago. The Trustees have therefore been looking so the Scheme should only be willing to pay by that process, amounting to around ‘If you go back to the mid-80s you could for other assets with secure and inflation- high fees if we have strong grounds to trust £900 million over 11 years. ‘The level of buy a long-term UK government bond with linked cashflows that will make payments a manager’s ability to achieve a higher net contributions will be revisited after the 2013 a yield of around 9%. To invest in the same ‘way into the future’ – probably with a bit return than an alternative lower cost solution.’ Please send your editorial contributions, or comments/feedback, to: Prospero, BBC Pension and Prospero is provided free of charge to retired BBC Benefits Centre, Broadcasting House, Cardiff CF5 2YQ. employees, or to their spouses and dependants. Email: [email protected] Prospero provides a source of news on former Please make sure that any digital pictures you send are colleagues, developments at the BBC and pension scanned at 300 dpi.