28th July 2017 BBC “cap off” a bad month with some good news

The BBC has emerged victorious today (28 July 2017) in a long running saga regarding the validity of its pensionable salary capping arrangement.

Changes to the BBC Pension Scheme (“Scheme”) were introduced by the BBC in late 2011 in order to help with a significant deficit. The alterations included an option to remain in the existing benefit sections but with a pensionable salary cap (“Cap”). Mr Bradbury was a member of the BBC Philharmonic Orchestra and a member of the Scheme. He complained to the Pensions Ombudsman (“PO”) that the Cap broke the link between pay and pension rendering it contrary to section 91 of the Pensions Act 1995 (“Section 91”). Mr Bradbury also complained about the process the BBC adopted to effect the changes to the Scheme in 2011.

Under the rules of the Scheme, the BBC had a right to determine Basic Salary that counted for pension purposes. Mr Bradbury argued that this affected his future pension rights and breached Section 91, which protects the right to a future pension. The BBC argued it could decide how much of any pay rise should count towards Basic Salary in the Scheme rules. The PO agreed with the BBC that it could determine how much of a pay rise counted towards Basic Salary—and therefore Pensionable Salary—and that this could be agreed with the relevant employees, rather than involving the Scheme trustees. This was held not to contravene Section 91 or any other legal principle.

Mr Bradbury also claimed that the process the BBC had adopted was not a real consultation as it did not offer a genuine choice and so was in breach of its duty of trust and confidence. The PO did not find in Mr Bradbury’s favour on this point either.

Mr Bradbury appealed the PO’s findings but the High Court decided against him. Next, he appealed to the Court of Appeal, which issued its judgment on 28 July 2017.

The Court of Appeal—in a unanimous judgement—upheld the High Court’s decision that the Cap is lawful, is not contrary to s91, and that the BBC was not in breach of its duty of trust and confidence when introducing the Cap.

At last the BBC has some good news on matters of pay in an otherwise bad news month! The case is also good news for employers seeking to introduce a cap on pensionable salary, or who have already done so.

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