Personnel Today
  • Home
    • All PT content
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • Brightmine
    • Learn more
    • Products
    • Free trial
    • Request a quote
  • Webinars
  • Advertise
  • OHW+

Personnel Today

Register
Log in
Personnel Today
  • Home
    • All PT content
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • Brightmine
    • Learn more
    • Products
    • Free trial
    • Request a quote
  • Webinars
  • Advertise
  • OHW+

Pay & benefitsPensionsOpinion

Pensions reform will lead to transparency

by Personnel Today 15 Feb 2005
by Personnel Today 15 Feb 2005

Pensions are back under the spotlight. The new pension regime, which comes into force on 6 April 2006, is causing companies and individuals to look carefully at pension policy and provision and they are likely to face some tough decisions.

Until now, pensions had been the missing link in executive remuneration. They are difficult to value, and comparisons of values are particularly problematic. Typically, they have not really been considered as a fully integrated ‘part of the package’. But this is changing.

Most elements of an executive remuneration package are benchmarked against a defined peer group, and remuneration committees are very conscious of the need to be able to justify to shareholders that the package offered to executives is not only in line with the peer group, but also with corporate objectives. This has led to many of the elements of executive reward being linked to corporate or individual performance.

However, this is not the case for pensions. There is a surprising inequality in pension provision for executive directors across FTSE 350 companies, and sometimes within the same organisation. Executive pensions are typically worth between 20% and 70% of salary, and sometimes more, with additional diversity in the type of arrangement on offer. This has led to the current position, where pensions have become the missing link in executive reward strategy.

For many years, executive directors participated in the wider company-defined contribution benefit plans, typically on more generous terms than most staff, and these plans tended to operate in very similar ways across companies. The introduction of the earnings cap in 1989 and the closure of many defined benefit plans have introduced greater diversity. When executive directors are appointed, the pension provision is likely to be a key part of the negotiation on remuneration. As a result, in many organisations, individual negotiations on pensions have displaced any attempt to develop and maintain a coherent strategy on the subject.

Until now, this lack of coherence has largely been ignored, due in part to a general lack of disclosure relating to pension provision. Given the substantial values involved, and an increased focus from shareholders and individuals, this cannot continue.

Sign up to our weekly round-up of HR news and guidance

Receive the Personnel Today Direct e-newsletter every Wednesday

OptOut
This field is for validation purposes and should be left unchanged.

By combining the need to review executive pensions – in light of the potential impact of the new tax regime – with a benchmarked analysis of current executive pensions practice, the prospect of integrating executive pensions into overall executive remuneration becomes much more realistic. It allows remuneration committees to address the concerns of shareholders, and will lead to greater transparency on the composition of the overall executive reward package.

By John Connolly, UK chief executive and partner, Deloitte


Personnel Today

Personnel Today articles are written by an expert team of award-winning journalists who have been covering HR and L&D for many years. Some of our content is attributed to "Personnel Today" for a number of reasons, including: when numerous authors are associated with writing or editing a piece; or when the author is unknown (particularly for older articles).

previous post
Restaurateurs team up to block proposed smoking bans
next post
Setting up a homeworking initiative

You may also like

Living wage pushes up spring pay settlements

2 Jul 2025

Why bosses must set pay independently

2 Jul 2025

Reforming paternity leave could benefit UK by £13bn...

30 Jun 2025

Bank of England says NIC rise is dampening...

27 Jun 2025

Graduate pay versus the living wage: an HR...

25 Jun 2025

Pensions regulator: make sure summer staff don’t miss...

18 Jun 2025

Workplace disputes: ‘Most employment tribunals could be avoided’

12 Jun 2025

Pension Schemes Bill should be ‘hugely beneficial’ for...

5 Jun 2025

‘Task masking’ is about poor management, not rebellion

2 Jun 2025

Pension reforms could put savings at risk, group...

30 May 2025

  • Empowering working parents and productivity during the summer holidays SPONSORED | Businesses play a...Read more
  • AI is here. Your workforce should be ready. SPONSORED | From content creation...Read more

Personnel Today Jobs
 

Search Jobs

PERSONNEL TODAY

About us
Contact us
Browse all HR topics
Email newsletters
Content feeds
Cookies policy
Privacy policy
Terms and conditions

JOBS

Personnel Today Jobs
Post a job
Why advertise with us?

EVENTS & PRODUCTS

The Personnel Today Awards
The RAD Awards
Employee Benefits
Forum for Expatriate Management
OHW+
Whatmedia

ADVERTISING & PR

Advertising opportunities
Features list 2025

  • Facebook
  • Twitter
  • Instagram
  • Linkedin


© 2011 - 2025 DVV Media International Ltd

Personnel Today
  • Home
    • All PT content
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • Brightmine
    • Learn more
    • Products
    • Free trial
    • Request a quote
  • Webinars
  • Advertise
  • OHW+