George Entwistle was lambasted last week for his £450,000 severance pay and his pension pot of £877,000 after the former BBC director-general resigned just two months into the job.
But Mr Entwistle has missed out on a much larger annual pension because he joined the BBC just months after the broadcaster introduced a cap on payment for retired executives in early 1989.
At the time of the corporation’s last report and accounts Mr Entwistle was eligible for a pension of £59,000 when he reaches retirement age at 60.
His financial outlook would now look more rosy if 23 years ago he had started work only a few months earlier, and joined the pension scheme straight away. Had he done so he would now be eligible for a pension of at least £90,000, some 50 per cent higher.
The explanation lies in a tightening of the rules in May 1989 so that new joiners to the pension scheme would be subject to a maximum annual limit of pensionable salary of £129,600.
Mr Entwistle joined the BBC in the same year as a graduate, probably in the autumn – although the corporation is unable to say precisely which month. He then waited to enter the pension scheme, not doing so until August 1990.
That delay, deliberate or otherwise, may have cost him – presuming he enjoys a long and healthy retirement – hundreds of thousands of pounds; maybe in the region of half a million.
John Ralfe, an independent pensions expert, said: “Had he joined the pension scheme 15
months earlier he would have had a pension of£90,000, not £59,000.”
The BBC did not dispute the calculations, but said that it could not give detailed answers about Mr Entwistle’s pension, saying it was a private matter.
The calculation of a £90,000 pension is based on Mr Entwistle’s salary of £248,000 before he became director-general and his 22 years in the pension scheme.
While his salary leapt to £450,000 on his appointment to director-general, this pay rise would not have led to a jump in his pension because of new BBC pension rules which came into effect in 2011. These limited any rise in pensionable salary to just 1 per cent a year.
Incidentally, Ralfe argues that the market value of Entwistle’s existing pension (£59k at March 2012) is around £1.3m, much higher than the £0.9m quoted in the BBC’s accounts. But that reflects differences in actuarial assumptions rather than any terrible scandal, I would suggest.