Britain's directors living in pensions' 'ivory tower'

Nov 24 2005 by Nic Paton Print This Article

Eight out of ten of the UK's top companies provide directors with pensions that can pay out in full when they reach 60 and are worth, on average, 26 times those of most employees, according to the TUC.

The union body's analysis of the annual reports of more than 50 of Britain's leading companies showed 98 per cent of their final salary pension schemes for executives had a normal retirement age of less than 65.

In a little under 80 per cent all directors could retire at 60 without their pension being reduced.

Only in one company did some Ė although not all Ė executives have to work until they were 65.

The research also showed that directors' final salary pensions were most likely to build up twice as fast as the most common rate for employees in final salary schemes, meaning that it took twice as many years for staff to reach a full pension as it did for directors.

It also showed that directors of the UK's 100 most important companies had amassed pensions worth a total of £.9 billion which, on average, would pay out £167,000 a year if claimed now, said the TUC.

This was more than 26 times the national average of £129 a week (£6,344 a year) and over 30 times the average public sector pension, it added.

TUC General Secretary Brendan Barber said: "Britain's boardrooms are secure in a pensions' ivory tower.

"Top bosses can expect to live long retirements on luxury pensions that are far more generous than their employees can expect.

"They should stop lecturing the rest of us on how we should get smaller pensions from a higher retirement age.

"After these revelations it is hard to see how their voice can carry much weight in the pensions' debate," he added.

The TUC cited letters to newspapers, such as The Times, accusing Prime Minister Tony Blair him of setting "a poor example to the country" by agreeing principles of public sector pension reform with trade unions that allow current staff to claim pensions at 60 but new staff, joining from as early as next year, to have a normal pension age of 65.

Speaking at the TUC Congress in September 2003, CBI director general Digby Jones, said: "...we know business must be mindful of the need to set a good example when it comes to, for example, salaries and pensions", the TUC added.

The Pension Commission is due to deliver its final report on solutions to Britain's pensions' crisis on November 30.