Governance Statement

Chair’s foreword

The Trustee of the BBC Pension Scheme (the Scheme) understands that good governance, with the resources and structures to support effective decision-making, will help the Scheme give a positive member experience, comply fully with legal and regulatory requirements and manage risk.

This document explains to Scheme members the arrangements that are in place for managing the Scheme appropriately and effectively. The Trustee wants to operate a well-run scheme and is committed to regularly reviewing and improving its governance arrangements.

Catherine Claydon

Chair of the Trustee Board

Trustee’s objectives

The Trustee’s main objective is to ensure that:

• all beneficiaries receive the benefits to which they are entitled under the Rules of the Scheme; and
• there are sufficient assets to meet the Scheme’s liabilities as they fall due.

To meet this objective, the Trustee monitors the balance between the Scheme’s assets and liabilities, holds the assets securely on trust, invests them appropriately, makes provision to meet the future costs of benefits jointly with the BBC, and ensures the proper administration of the Scheme, making appropriate use of resources.

Governance and regulatory compliance

Governance is the framework of rules, relationships, systems and processes by which an organisation, like a pension scheme, is controlled and operates. The Trustee may delegate day-to-day management of certain Scheme functions to third parties, but it remains accountable for ensuring the Scheme is well managed.

The Trustee aims to meet good governance standards. It manages the Scheme in line with industry best practice and the guidelines set out by the Pensions Regulator, in order to comply with applicable law and regulatory requirements and to achieve its objective of paying members the benefits due to them.

The Scheme

The Scheme operates as a trust. This means that the Scheme assets are legally owned by a trustee, and the trustee holds those assets to provide benefits for members. The assets are separate from BBC assets.

The Scheme is governed by a Trust Deed and Rules (the Rules), and the Trustee is required to act in accordance with these. The Rules set out (amongst other things):

• How the Trustee Directors are appointed and how the Trustee conducts its business
• The obligation on members and employers to pay contributions
• The investment powers of the Trustee
• Details of the benefits payable

BBC Pension Trust Ltd

The Trustee of the Scheme is a company, BBC Pension Trust Ltd. This is a wholly owned subsidiary of the BBC and exists only for the purpose of acting as sole corporate trustee of the Scheme. This is a common arrangement which simplifies management of the Scheme, for example when documents need to be signed.

The Trustee company acts through its Board of Directors. The directors are referred to throughout this document as ‘the Trustee Directors’ and the Board of Directors as ‘the Trustee Board.’

Trustee Board structure and activities

There are eleven Trustee Directors.

• Four are appointed by the BBC.
• Four are appointed by Scheme members. Three of these are elected by the active members and those deferred members employed by participating employers. One is elected by the pensioners. All four serve for six years.
• Three are independent Trustee Directors, appointed by the other Trustee Directors with the agreement of the BBC Board.

The Trustee exercises its powers and duties in the interests of the Scheme as a whole, as required under the Scheme’s governing documents and legislation.

The Chair of the Trustee Board is responsible for leading the Board and promoting effective decision-making. The names of the Trustee Directors are published in the Scheme’s Annual Report and Financial Statements and are available online here.

Trustee knowledge and understanding

The Trustee Directors must have the appropriate level of “knowledge and understanding” of pensions and investment necessary for them to fulfil their role and keep up to date on key issues and trends in occupational pensions. All Trustee Directors are offered a range of training opportunities.

Trustee Directors are expected to keep their knowledge and understanding up to date through Scheme-specific training sessions provided as part of Trustee Board meetings, and by reading and attending self-selected seminars and conferences. Trustee Director training is recorded and monitored.

Meetings and decision-making

The Trustee Board meets at least quarterly and keeps records of its decisions.

At least six Trustee Directors must be present at a meeting in order to conduct business. Of the six, at least one must be appointed by the BBC, at least one must be appointed by Scheme members and at least one must be an independent Trustee Director. Unless a vote is requested, decisions are made by consensus. If a vote is taken, the matter is decided by a simple majority of those present. If there is an equality of votes, the Chair has a second or casting vote.

Items discussed at Trustee Board meetings include committee reports, appointment of Scheme advisers, funding position, investment strategy, Scheme budget and accounts, auditor’s reports and the annual workplan.

Delegation

The size of the Scheme is such that it is neither practical nor desirable for the Trustee to become involved in all day-to-day activities or decisions. The Trustee’s primary role is to set overall policy and strategy, and to put in place and monitor the effectiveness of the controls designed to ensure that the Scheme operates in accordance with its objectives.

The Trustee may appoint service providers to carry out specific tasks such as administration of pension benefits. It may also appoint third parties to provide advice and supplement the skills and knowledge of the Trustee Board. The Trustee, however, retains ultimate accountability.

The Trustee has appointed a Pensions Executive (the Executive) to support the Trustee and administer the Scheme on its behalf. The Pensions Executive, and staff who report to them, provide the personnel and resources necessary for the day-to-day administration of the Scheme from the Pension and Benefits Centre in Cardiff. The Executive and staff are employed by the BBC but are managed by and accountable directly to the Trustee for Scheme services, under the terms of an Administration Agreement between the Trustee and the BBC. This sets out the terms on which the services are provided and their scope. A more detailed Services Schedule sets out the level of service that the Trustee can expect for each activity. The Trustee regularly monitors compliance with the Services Schedule.

The Trustee has also established BBC Pension Investment Limited, a company regulated by the Financial Conduct Authority, to exercise investment discretion in relation to specific aspects of the Scheme’s investment portfolio.

The Trustee delegates many of its powers and discretions under the Trust Deed and Rules to the Executive or members of their teams. The Trustee Board also delegates some of its powers and responsibilities to sub-groups of Trustee Directors called committees.

All delegations are documented and in each case the level at which such authority can be exercised is specified. The Trustee is satisfied that those who exercise this authority on its behalf have a strong understanding of its values and objectives.

Committees

The Trustee has four standing committees.

The Governance Committee considers the systems and processes concerned with the management of the Scheme.

The Investment Committee implements the Trustee’s investment strategy and the arrangements for managing the Scheme’s assets. It includes two independent members, who are appointed by the Trustee Board. The independent members are expected to enhance the capability of the Investment Committee to manage the Trustee’s investment responsibilities effectively. They carry the same fiduciary responsibilities in this role as the Trustee Directors

The Finance and General Purposes Committee monitors the effectiveness of the Scheme’s financial management and internal controls and all aspects of the Scheme’s administration.

The Scheme has a two-stage Internal Disputes Resolution Procedure, which is appended to the Rules. Normally, the first stage is determined by either the Communications and Engagement Manager or the Administration Manager (or the nearest equivalent to these offices). The Internal Dispute Resolution Committee considers second-stage complaints referred by complainants who feel the matter has not been resolved satisfactorily at the first stage. The Internal Dispute Resolution Procedure is available here.

Committee members are appointed by the Trustee Board. The Trustee has approved terms of reference that explain how the Trustee Board and its committees operate. These are available here.

Conflicts of interest

The Trustee has agreed a conflicts of interest policy and procedures, which is available here. Trustee Directors are required, on joining the Board and at meetings, to declare any personal or business interest that could give rise to a conflict of interest, and to update this declaration as required. All declarations are recorded. The policy and procedures set out the ways in which a potential conflict of interest may be handled.

The Trustee has adopted an Anti-Bribery Policy and a Hospitality Policy in response to the Bribery Act 2010. Subject to certain criteria, any hospitality received is recorded on a central register which is available to members on request.

Compliance with the law and regulations

There is no single source of pensions law. The main sources are:

• trust law, from which is derived the general principles of trusteeship, such as the requirement for trustees to act prudently, conscientiously, honestly and with the utmost good faith;
• social security law, which regulates the interaction between the State scheme and occupational schemes;
• tax law, which provides and controls the tax reliefs available to pension schemes;
• codes of practice issued by the Pensions Regulator; and
• pensions legislation, which sets out the statutory requirements for occupational pension schemes.

The Trustee ensures that the Scheme operates in compliance with all applicable law and regulations.

The Scheme is registered under Chapter 2, Part 4 of the Finance Act 2004. Consequently, the Scheme and its members benefit from certain tax reliefs currently available.

Reporting to the Pensions Regulator

The Trustee submits an annual report to the Pensions Regulator.

The Trustee has a statutory duty to report breaches of law and certain Scheme- related notifiable events to the Pensions Regulator. The employers, advisers and Scheme administrators also have a duty to report breaches of law to the Pensions Regulator and the employers have a duty to report employer-related notifiable events.

Funding and investment

The Trustee’s funding and investment objectives are set out in the Statement of Funding Principles and Statement of Investment Principles. These are published here and are regularly reviewed.

The Actuary advises the Trustee on funding the Scheme. The funding position (i.e. the value of assets held compared to the value of benefits that the Scheme expects to pay) is monitored throughout the year. A formal update is given to the Trustee annually and the results are notified to members and to the BBC. A full review of the Scheme’s financial position is carried out at least once every three years by undertaking a valuation. The Actuary then calculates the contributions needed from the employer both to pay for benefits as they continue to accrue, and to make good any deficit. The contributions payable by the BBC are recorded in a Schedule of Contributions. This is published here, along with valuation reports.

The Statement of Investment Principles explains the principles governing the Scheme’s investment policy. The Trustee sets investment policy. It consults the BBC and takes advice from the Scheme Actuary, its investment consultants and other advisers as appropriate. The Trustee delegates responsibility for implementing investment policy to the Investment Committee, and day-to-day investment decisions to suitably qualified investment managers. 

More information about the Scheme

The Trustee publishes information about the Scheme on the documents section of this website.

This includes:

• The Scheme’s Annual Report and Financial Statements, and a shorter version of this called the Summary Report – covers membership, funding, assets, investments and Board activity
• Statement of Investment Principles
• Responsible Investment Policy
• Valuation Report Member Handbooks and Guides