The Bergen Philharmonic Orchestra (Bergen Filharmoniske Orkester, BFO) revealed on Tuesday its pension costs are NOK 60 million (USD 10 million) higher than estimated, and it needs to dramatically reduce its activities. The unexpected costs threaten the BFO‘s 250th anniversary celebrations planned for next year.
The orchestra is one of several cultural institutions that have been hit hard by increasing pension costs, reported newspaper Bergens Tidende. The BFO’s pension obligations are now calculated at NOK 174 million, 20 million more than last year and 60 million more than it had estimated. It means the orchestra actually has a negative net worth of around NOK 46 million, and in 2013 recorded a deficit of NOK 2.9 million.
“Now we’re eating away at the equity, but according to the forecasts that will be exhausted during 2015,” said Chief Executive Bernt Bauge. “So we’re nearing a critical situation.” Savings measures have been introduced to secure the minimum resources needed to celebrate the orchestra’s 250 year anniversary next year.
The Oslo Philharmonic faced a similar situation, confirmed Chief Executive Ingrid Røynesdal. “We still have a little equity to use, but our long-term obligations are just as big as in Bergen,” she said. “The pension system is not sustainable. Expenses have increased significantly from last year to this year for us, just like in Bergen. We must simply do something with this. All public cultural institutions have the same problem.” The Norwegian Opera and Ballet and the National Theatre are also struggling with rising costs.
The defined benefit pension plan most cultural institutions come under grants staff a certain percentage of their final salary in their pension, usually about 65 to 70 percent. It is expensive for the institutions, particularly when interest rates are low, wages are growing and life expectancy is increasing.