More than half the companies that have closed final salary staff pension schemes to new employees still allow new directors to join the boardroom final salary scheme, the TUC has claimed.
The first TUC PensionsWatch survey found many parts of British industry are now operating a two-tier pension structure. "There is a deep and growing divide between the types of pension benefits that staff can expect and those that are offered to company directors," the report says.
Despite widespread closure of final salary pension schemes, which guarantee to pay a pension based on years worked and leaving salary, seven out of ten directors at 121 of the UK's biggest firms still enjoy the benefit. Just one in seven are restricted to defined contributions (DC) schemes.
The report found that almost half of firms have closed their final salary schemes to new staff. British employers have saved £1.6 billion by closing final salary schemes and reducing their contribution to replacement DC schemes.
The average director’s pension fund in a final salary scheme is now worth £2.3 million, and if only the director with the biggest pension is taken into account the average rises to £4.6 million. These would pay £168,000 a year and £312,000 a year, 27 and 51 times the national average occupational pension respectively
In addition, the study found directors typically build up a final salary pension twice as fast their staff.
"This is a case of top directors tightening other people's belts not their own," said TUC General Secretary Brendan Barber. "It is a straightforward case of boardroom hypocrisy, directors are feathering their own pensions nests. And with pressure on unjustified top pay growing, the worry must be that money is being quietly transferred to generous pensions instead."