Bosses hit by pension closures too

Oct 20 2004 by Nic Paton Print This Article

Workers denied access to final salary pensions could be forgiven a certain amount of schadenfraude as a survey has shown the lucrative schemes are now being closed to top executives too.

Consultancy Watson Wyatt has said the majority of companies that have ended final salary schemes for new recruits have also closed them to senior executives.

While nearly one in three - 29 per cent Ė of companies that have closed their schemes do still provide final salary pensions for their executives, most now have ended this option.

Executives are instead being offered defined contribution pensions, said the consultancy, which advises more than 50 per cent of the UKís 100 largest corporate pension schemes.

Four out of five FTSE-100 companies now offered a defined contribution pension to at least some of its employees, said the survey.

"Initially, many companies kept their final salary schemes open to their most senior employees to keep their executive pay packages competitive," said John Ball, Watson Wyatt head of executive reward consulting.

"But increasingly companies are realising that not only is it becoming less palatable to have different pension structures for executives and the majority of the workforce, but they are also questioning the higher and less predictable costs associated with running a final salary plan for their highest paid employees," he added.

The implication of this when it came to recruiting top executives was that organisations would need to think about other long-term incentives, such are performance shares and share options, to help them reel in the best and brightest, he concluded.