Top UK bosses can retire at 60 with luxury pensions

Eight out of ten of the UK’s top companies provide directors with pensions that can pay out in full at 60 and are worth, on average, 26 times those of most employees.

The TUC’s analysis of the annual reports of over 50 of the UK’s leading companies published today (Thursday) shows that 98 per cent of their final salary pension schemes for executives have a normal retirement age of less than 65. In fact, in a little under 80 per cent of the company schemes all directors could retire at 60 without their pension being reduced. Only in one company do some - though not all - executives have to work until they are 65.

The research also shows that directors’ final salary pensions are most likely to build up twice as fast (1/30ths) as the most common rate for employees in final salary schemes (1/60ths), meaning that it takes twice as many years for staff to reach a full pension as it does directors.

TUC research shows that directors of the UK’s 100 most important companies have amassed pensions worth a total of 0.9 billion which, on average, would pay out 167,000 a year if claimed now. This is over 26 times the national average of 129 a week (6,344 a year) and over 30 times the average public sector pension.

TUC General Secretary Brendan Barber said:
Britain’s boardrooms are secure in a pensions ivory tower. Top bosses can expect to live long retirements on luxury pensions that are far more generous than their employees can expect. They should stop lecturing the rest of us on how we should get smaller pensions from a higher retirement age. After these revelations it is hard to see how their voice can carry much weight in the pensions debate.

Attitudes of business to pensions reform
On 1 November The Times newspaper published excerpts of a letter from 16 business leaders to the Prime Minister accusing him of setting a poor example to the country by agreeing principles of public sector pension reform with trade unions that allow current staff to claim pensions at 60 but new staff, joining from as early as next year, to have a normal pension age of 65.

The Times reported that the letter was written by John Sunderland, President of the CBI, and co-signed by businessmen including Martin Broughton, chairman of British Airways, Stuart Rose, chief executive of Marks & Spencer, Nick Land, chairman of Ernst & Young, and Paul Walsh, chief executive of Diageo. The Times report said: Mr Sunderland spelt out the strength of feeling that exists within the business community about the growing disparity between public and private sector pension provision. He wrote that, although the letter’s 16 co-signatories alone employed more than half a million workers, many more, large and small alike, have expressed to me their deep concern. Mr Sunderland, who is also executive chairman of Cadbury Schweppes, told Mr Blair that he was encouraging a divisive two-tier pension system that represented a bad deal for the general taxpayer. A ’them’ and ’us’ attitude in our society is precisely what the country does not need, he wrote. He urged the Prime Minister to give these matters your urgent attention.

Speaking at the TUC Congress in September 2003, Digby Jones, CBI Director General, said: ...we know business must be mindful of the need to set a good example when it comes to, for example, salaries and pensions.