Fat cat pensions keep getting fatter

The gap between executive and boardroom pensions and the rest of the workforce is widening, an independent report claims.

The High Pay Commission's independent inquiry into boardroom pensions has revealed that the average annual pension received by a FTSE 100 director with a defined pension is worth £174,963, compared to £5,860 for the average defined benefit private sector pension.

Because of the complexity of pay and pension arrangements at the top end of the pay scale - with many companies making arrangements on an individual basis - the issue of executive pay has been neglected.

The growing gap

Although recent attention has been focused on public sector pensions, the High Pay Commission's inquiry says it findings show there is a "growing gap in the private sector between the retirement benefits that top directors can expect compared to the rest of the workforce".

The report also highlights the trend of pension cash supplements - which are paid in place of standard pension contributions as a way of topping up pensions once the lifetime pension allowance has been reached.

Almost a quarter of FTSE mid-250 directors and a third of FTSE 100 directors received a cash pension supplement on average of £121,500 and £160,817 respectively.

Both FTSE 100 and mid-250 firm directors only contribute 5% on average towards their pensions but receive 17% and 15% employer contributions respectively on top of this.  

"This area of top pay is often ignored but it is clear that while the bosses of some of the UK's biggest companies have been very good at reducing their costs by cutting the pensions of their workforce they have also been very good at protecting their own," the report writes.


More about