Average pensions for UK company directors rose by almost a quarter last year according to TUC research, which claimed they can retire on an average of almost £250,000 per year per head.
The TUC’s seventh annual Pensions Watch survey of directors at the UK’s 103 largest companies – by market capitalisation – found that they had amassed pension pots worth an average of £3.4m. This would provide an annual pension of £247,785 a year, claimed the report.
The TUC said some directors “can look forward to an annual pension of over £1m a year”, which it claimed compares to the average workplace pension of £8,320 a year.
“The average director’s pension is now 30 times the amount of the average workplace pension,” claimed the organisation. The gap last year was 25 times the amount of the average workplace pension.
TUC general secretary Brendan Barber said the difference is “nothing short of scandalous”.
“Top bosses justify their pensions, pay and bonuses on the grounds that they are rewards for success. But the stock market nose-dived in 2008, and yet the directors of these same companies have still managed to increase their pensions by over 20%.”
The report named US-based National Grid director Bob Catell as having the most valuable pension pot, which it said is worth £20.43m. Next was Unilever director Patrick Cescau, with a pot of £20.42m.
The much-maligned Sir Fred Goodwin, erstwhile boss of Royal Bank of Scotland, had a pension pot worth £16.63m when he resigned last year.
The report also said that more and more directors are building up pensions in company defined contribution (DC) schemes – so-called money purchase schemes – where their company places lump sums into their DC accounts.
The biggest sum paid out in the past year was £2.4m which went into the DC pot of Xstrata director Mick Davis. This was 172% of his annual salary, said the report.
Some 103 directors who opted for personal pension schemes had cash payments paid into these accounts. The highest recorded in the report was £400,000, paid into TUI Travel director Peter Long’s scheme.
The TUC said the report was based on information given in the accounts and reports of the companies examined.