BBC admits to £1bn pension fund deficit

The BBC has a £1billion black hole in its pension fund - a deficit expected to send the corporation £300million into the red this year.

Plunging investment returns and rising longevity of retired employees have produced a £1.07 billion shortfall, the corporation's annual report will reveal next week.

The BBC has written to its 55,000 staff and pensioners, reassuring them it has no plans to abandon its finalsalary pension scheme.

Finance director John Smith told them the deficit was due to new accounting rules and was based on a "snapshot" at the end of March, when the stock market was plunging.

Pensions would not be affected, he said. "The fund is healthy. It earns more income from its investments and contributions than it pays out."

The BBC joins a string of blue chip employers which have recently revealed vast deficits in their pension funds, including BT, Rolls-Royce, British Airways and ICI.