Bosses of top UK companies have accrued pensions worth £3.8 million, a rise of 12% on last year, culminating in criticism that the difference between boardroom and shop-floor pensions are “unfair”.
In the survey published yesterday by the TUC the largest boardroom pension belonged to Jeroen van der Veer of Royal Dutch Shell and was worth more than £21 million, paying out more than £1.3 million annually.
The survey showed that despite companies moving away from defined-benefit (DB) pension schemes for most staff, 54% of top directors were still in such plans.
For directors in defined-contribution schemes, the average company contribution rate was 19%, around three times the 6.7% rate normally available to employees.
Government plans to raise the state retirement age to 66 in 2016 mean many people will be working longer, yet, according to the study, most directors in DB schemes have a pension age of 60.
On the basis of their findings, the TUC is reiterating its call for directors and employees to become members of the same pension schemes with the same terms, adding that: “Different arrangements for directors and employees risk undermining workplace relations.”
Joanne Segars, chief executive of the National Association of Pension Funds, agreed: “While it is logical that higher earners will accrue bigger retirement pots, we have some real concerns about this issue. Investors may have questions about fairness if boardroom pensions are much more generous than those on the shop floor.
“Special arrangements like lower retirement ages and higher contribution rates need to be explained. We need much more transparency in this area.”