Bishop Hill The BBC's covert funding of greenery
Jan 14, 2014 BBC The Telegraph is apparently reporting (£) that the BBC has decided that the deficit in its pension scheme - some £740 million - should be made up by the corporation rather than by asking scheme members to make extra contributions.
It's a common meme on sceptic blogs that the BBC's output is influenced by its pension scheme's many investments in green businesses. I don't subscribe to this view myself since the scheme is defined benefit and therefore there would be no particular advantage to BBC journalists hyping greenery. Nevertheless, this new development means that the scheme will in effect have handed over all those hundreds of millions of pounds to green businesses at the expense of the licence fee payer. The political interests of the scheme managers are receiving an illicit subsidy.
Reader Comments (30)
A commenter on the Telegraph has posted this:
'The political interests of the scheme managers are being receiving an illicit subsidy.'
minor typo, I think 'being' should be deleted.
Completely agree with every thing else.
Maybe the Guardian, WWF, Greenpeace, 350.org Bill McB could persuade the BBC to disinvest from big oil, big coal, big pharma and arms manufacturers.....
Top 25 BBC equity Investments at 31 March 2013
Investment Holding £m
GlaxoSmithKline - 50.7
Rolls Royce - 48.2
BP - 46.7
Amazon.Com - 46.4
AstraZeneca - 46.3
Royal Dutch Shell - 43.0
British American Tobacco - 37.8
Roche Holding - 36.3
Rio Tinto - 34.2
BT Group - 34.1
Imperial Tobacco Group - 30.9
Vodafone Group - 29.8
Pinault Printemps - 26.7
Inditex - 26.2
Novartis - 25.5
Centrica - 25.3
BAE Systems - 25.3
Baidu - 25.1
Reckitt Benckiser - 24.5
Google - 23.6
Tencent Holdings - 23.5
Barclays - 23.2
Compass Group - 22.4
SABMiller - 22.3
Ebay - 21.4
The meme is looking at the BBC pension fund the wrong way round.
The real problem is that because they assume (correctly) that the public will end up paying the real cost of their pensions they are free to dabble and invest in their own hobbies and bien-pensant obsessions.
If I was in their shoes I would do the same and invest the smaller change in hell-ski operators and scuba-diving boats. And visit them to check up on the investments, natch.
Bishop,
Do you have a link to the green investments by the BBCPF? I'm with Barry Woods definitely Not Proven in my view. It raised its head on 28gate hits the MSM thread but nothing concrete transpired.
You can get the pension schemes documents here
@ TerryS
Your link is to an article about Jack Straw. What has that got to do with the BBC pension fund?
Sorry, from a different comment. Try this: http://www.bbc.co.uk/mypension/documents/scheme.html
BBC pension site: "The Scheme is also a member of the Institutional Investors Group on Climate Change (IIGCC) and has signed up to their investor statement. You can get a copy of the statement by visiting their website."
IIGCC site.
It's all a bit impenetrable at first glance.
Old story ? Or in addition to the 2010 £1bn black hole ?
@Barry Woods of course all those corps show up if part of BBC fund tracks the FTSE it must invest in the top 100 corps.
- but I think there is possibility that Green investments may be channeled through a number of smaller specialist funds, therefore those funds don't show up individually as the largest.
@Geronimo was going to go thru the pdf
- the Daily Express 2010 Articles call the BBCpension pot a £8bn green fund, but I see no dsta in their article
- the fact no one ever issues a firm denial is my strongest evidence so far
link to $15 trillion UNEP FI green investment fund alleges this 2010 John Sullivan article
Sorry my mistake ..yes extra billion since 2010
the Telegraph makes it clear
"the value of its assets minus its projected liabilities to retiring staff – has grown from £1.1 billion in 2010 to £2bn in 2013"
Sorry, but I don't see anywhere in the Telegraph article that the deficit is down to investments in green businesses...
Barry Woods
I don't now the truth behind the alleged losses of the BBC pension fund loses on renewables, but your list of investments detailed above means little in proving whether there is anything in these rumours. Typical losses on renewables since 2007 have been of the order of 80%, so even if investments in any particular company had been substantial they would be unlikely to appear on that list now.
You would need a list of all investments since 2007, and their current or sale values, to assess whether there was any truth to these rumours.
The holdings shown in the top 100 are discrete holdings and exclude exposure due to pooled funds.
Every pension fund that I am aware of has some 'green' investments. It would be unwise for any investor to avoid these investments when you consider the level of subsidy thrown at them.
Talk of an £8bn green fund makes Dana sound intelligent.
The BBC defined benefit pension has been progressively watered-down since 1996 and was closed to new entrants 2 years ago.
The deficit increase is not due to losses but to increased liabilities.
Have a look at the fall in annuity rates between 2010 & 2013 to get some idea of the problem.
Barry Woods
I also understand that the list you have posted is only DIRECT INVESTMENTS in equities. I remember reading a footnote on a BBC pension fund page (can't find it just now) where it explicitly noted that investments in FUNDS were not included in your list. Were there separate investments via green funds?
I see Barry Woods has posted a list of the BBC's top 25 equity investment holdings. In the 2013 Report and Accounts, the list given on p.21 is of the top 20 (i.e. it stops at Google) but the list is followed by the statement 'The total value of the investments shown above is £686.9m, which represents 6.6% of the Scheme’s total net investment assets'.
Numbers 21-25 on Barry's list will increase that figure but I doubt by much, which leaves perhaps more than 90% of the fund invested in other things. Some are identified generically, such as property (9.2%), bonds etc. but there must still be quite a lot of this fund invested in undisclosed areas.
pre-1996 members of the scheme could retire on index linked, half pay pension after just thirty years. This beats the very generous civil service scheme where half pay retirement is after forty years service.
...the scheme will in effect have handed over all those hundreds of millions of pounds to green businesses at the expense of the licence fee payer...
Not so much of an issue for me - I cave up paying the BBC several years ago..
The pre-1996 BBC scheme was not more generous than the civil service scheme.
The civil service scheme gives a tax free lump sum in addition to the pension.
Like Dodgy Geezer, if you don't want to contribute to the BBC, then don't. Stop paying the licence fee - it's the only way. It has the added advantage that you won't addle your brain with BBC propaganda either.
Civil Service: ten years additional work, transport costs, payments into the scheme. BBC: none of the foregoing with forty years of pension for the price of only thirty years work plus retire ten years younger . Which would you have?
@brae, in 1996 I would have chosen the non-contributory civil service scheme which gave a bigger pension per year than the contributory BBC scheme.
I avoided that choice by moving into the private sector (ITV) which gave a 50% pension for 25 years service.
I know that Loodamparsky or whatever his name is doesn't require any data to reach conclusions so there's no reason to hand him some.
Does anyone have actual numbers and a reference for the BBCPF green investments. I have followed up many links posted on BH and elsewhere and never found anything concrete. For me this is just another Internet Myth like swallowing spiders in your sleep. I'll repeat what I said a few days ago on another thread.
My position remains the same.
With government support of green technology being worldwide why wouldn't a pension fund invest
Having invested why wouldn't a pension fund be keen to protect and increase the value of those investments
There is still nothing more than vague hints and circumstantial evidence no hard numbers
Richard Black or any BBC reporter would be happy to report anything showing big industrial concerns supporting their view.
If this were a Scottish trial the BBCPF could bank on a Not Proven verdict as their worst case scenario.
Silence by the BBCPF in answer to a "have you stopped beating your wife?" Question is evidence of nothing.
I reckon that unless you have definite numbers and a reliable source then following the BBCPF example might be a good policy. It would save me time and effort because I'd love to know for sure.
@ Rob Wansbeck
The reason that licence fee payers will pay three quarters of a billion for the deficit in the BBC scheme is that under the pre-1996 pension scheme, thirty years contributions were insufficient to fund a half final salary pension. That it was uneconomic is confirmed by the fact that the scheme was closed for post-1996 recruits. For the record the civil service pension scheme is contributary.
@brae,
Both the pre and post 1996 pensions built up in sixtieths. This was very common at the time as it allowed an employee to build up the maximum allowed 2/3rds pension after 40 years service. The main difference was a reduction in inflation protection. Far from being unaffordable, pension funds had so much surplus that Gordon Brown was able to launch his infamous tax raid in 1997.
The civil service scheme was non-contributory although they did make a small contribution for an enhanced widows pension.
They are becoming rare but I was fortunate enough to be able to join a private sector DB scheme building in sixtieths about 3 year ago.
The increase in deficit which has affected many pension funds recently is largely due to falling gilt yields and the subsequent increase in the cost of annuities.
@Rob Wanbeck
I was a member of the civil service scheme before I left to start my own business. I paid contributions into the scheme and these were not limited to widows benefits. Check out the scheme website for confirmation of contributions. The facts remain unchanged, both schemes are contributory but half pay pensions in the BBC accrue in thirty years against the forty years for the same benefit in the civil service, which is my point.
Brown's tax raid involved making pension scheme gains subject to capital gains tax for the first time against a background of a strongly rising stock market, post the 1992 ERM recession shambles, which boosted pension funds.The consequences of Brown's tax for the BBC scheme is that an already over-generous scheme is presented with additional difficulties in meeting its commitments. I believe that the current three quarters of a billion will be only the first of many licence fee subventions.
@brae,
I'm sorry but you need to check your facts. You have even confused Brown's 1997 tax on dividends with Lawson's 1988 tax on surpluses.
In 1996 civil servants made a 1.5% contribution which was refundable if they had no dependants.
BBC staff paid 7.5%.
The tax on surpluses and 'pension holidays' taken to avoid this tax should give you a clue as to funding levels.
You also seem unaware that the civil service scheme also gives a tax free lump sum payment of 3 years pension. This made the civil service scheme more generous than the BBC scheme even allowing for the different accrual rates not to mention the contribution rates.