Bosses avoid credit crunch with £200,000 pension

Directors of the UK’s top companies can retire on pensions of over £200,000 a year, according to the sixth annual TUC PensionsWatch survey.

The survey, which analyses the pension arrangements of 346 directors from 102 of the UK’s top companies, shows that top bosses have amassed pension pots that average around £3m each, providing an annual pension of £201,700 a year – 25 times the average workplace pension that ordinary workers receive (£8,100). Directors with the greatest entitlements at each company have average pension pots of £5.2m and can expect a pension of £333,400 a year.

PensionsWatch reveals that bosses have bucked the trend towards riskier and less generous pensions for ordinary workers, with three quarters of the directors surveyed (76%) on DB schemes.

The survey found that directors in defined contribution schemes received an average employer contribution of £91,700. The average employer contribution rate was around 21%, three times the average rate for ordinary workers in this type of scheme (around 6.5%). The top directors with the highest pension payments at each company received an average employer contribution of £149,600.

While many employers across the public and private sectors are increasing the length of time people have to work by raising retirement ages to 65, the majority of directors in the TUC study are still able to retire at 60. Of the 40 companies that provided information about the normal retirement age (NRA) for directors, two thirds (26 companies) still had an NRA of 60.

Of the 19 financial sector companies analysed – 18 of which offered DB schemes to at least one director – just four companies disclosed the accrual rate they use to calculate pension benefits.

TUC General Secretary Brendan Barber said: “Many of the most lucrative pension arrangements are shrouded in secrecy, making it hard for investors to scrutinise them and ensure that bosses are accountable. If top directors can really justify their rewards, they must be bolder in declaring their pay and pensions to investors and their staff.”