The TUC has accused the directors of the UK’s top 100 companies of hypocrisy for pumping millions of pounds into their own pensions while they reduce the contributions they pay into staff schemes.
The TUC’s latest PensionsWatch report claims that more than half (55 per cent) of the directors in final salary schemes accrue pension at 1/30th of salary a year, a rate twice as generous as the 1/60th most employees are offered. Fewer than a third of directors (29 per cent) have a rate of 1/60th.
The difference means that a director with 20 years service could retire on full pension while a typical employee would need to work twice as long.
Many firms have also closed their final salary schemes (also known as defined benefit schemes) - which give workers some certainty over their retirement income – and replaced them with riskier money purchase (defined contribution) plans.
Two thirds of the directors in the TUC’s PensionsWatch database are in more generous final salary pension schemes. But even where directors are members of money purchase pensions, the rate of company contribution was between three to five times higher than the normal rate for UK employees.
Average company contributions to employees’ defined contribution schemes are six per cent of salary but the average contribution for directors on the PensionWatch database is just under 20 per cent. In some cases companies are paying 30 per cent on top of a director’s salary into a pension.
Brendan Barber, TUC General Secretary, called for the full disclosure of employee and director pensions in company annual reports. The lack of transparency on pensions could allow directors to ramp up retirement benefits to offset investor pressure on other elements of pay packages, he argued.
"It smacks of double standards for Britain’s boardrooms to be stuffing their pensions to the brim while staff pensions schemes are being closed because they are too ‘costly’ or are receiving paltry contributions," Barber said.
"There is simply no good reason for Britain’s top directors’ to give their pensions the VIP treatment on top of the huge salaries they are paying themselves.
"A pension based on the same rules as those which apply to their staff would be enough to deliver a huge pension for bosses. But this is still not enough for them. Too many have their snouts in a pensions trough."