Unions have criticised the widening pensions gap between company directors and their staff after a report found that the UK’s top bosses share a pot of £900m.
A survey of 102 of the largest employers conducted by the Trades Union Congress (TUC), which included Marks & Spencer, BP and Royal Bank of Scotland, found the average executive can retire at 60 on a final salary pension worth more than £3m, up £300,000 in a year.
This figure represents an annual pension of £193,000, more than 25 times the average UK worker’s pension of £7,500, according to the TUC.
For the highest paid directors of the top UK firms, the average pension is worth £5.3m, up £400,000 in a year. This represents 42 times more than most staff pensions, and an increase of 10% since last year, said the TUC.
The biggest final salary pension pot in the survey exceeds £21m, £2m above the largest sum in 2006, while five directors have a pension pot worth more than £12m.
The TUC survey found that while 59% of those participating companies have closed their final salary (defined-benefit) plans for workers, 79% of the businesses still have those schemes for directors.
Brendan Barber, general secretary at the TUC, said: “Too many top directors have gone on closing or cutting schemes for their workforce, while keeping gold-plated pensions for themselves.
“Even if top directors were in the same scheme as their workforce they would still get big pensions because their pay is so much greater than those of the staff they employ,” he added.
John Cridland, deputy director-general at the CBI, said: “These days, successful company directors are in demand around the world, so while big number salaries and pensions might feel uncomfortable or unfair to some, cutting ourselves off from the global talent market or taxing high fliers out of existence would harm the UK’s economy at no benefit to ordinary workers.”
He added: “Top execs have often served companies for many years and like any longstanding employee, are more likely to be in final salary pension schemes with earlier retirement dates – and will have built up sizeable pension pots too.”