'Cash top-ups' for bosses' pensions

More than half of top company directors are now receiving cash instead of contributions to their pension schemes, according to a new study.

TUC General Secretary Frances O'Grady has hit out at the pension arrangements of top company executives
TUC General Secretary Frances O'Grady has hit out at the pension arrangements of top company executives

The TUC's annual analysis of retirement deals for senior executives found that the switch to cash followed changes made by the Chancellor to tax rules affecting allowances for company pensions.

Research among more than 340 directors found that almost two thirds received money last year - totalling £32.7 million - for at least part of of their company's contribution towards their retirement.

The number being paid money more than doubled compared with the previous year.

The PensionsWatch report said in most firms, the cash amount received by senior directors instead of a pension contribution was almost £150,000 - 17% of their salary.

Company chief executives are receiving £230,854 on average in cash, almost 25% of their salary, said the TUC.

While employees in pension schemes have seen their pension arrangements become less generous in recent years, company executives continue to enjoy substantial retirement benefits, said the union organisation.

TUC general secretary Frances O'Grady said: "Most workers, if they're fortunate enough still to be in a company pension scheme, will be retiring on a lot less they would have a generation ago. Not so for company directors, who will still be looked after very handsomely in their retirement.

"There may have been a move away from more generous defined benefit schemes for top directors in recent years, but this change certainly does not mean that they are losing out. Unlike employees, who have seen the value of their pensions slashed, company bosses are now getting huge cash payouts on top of their already substantial salaries.

"Similarly the many workers who will now have to wait until they're at least 65, and maybe even older, before they can get their full pension will be understandably upset to learn that most of Britain's top bosses are still able to get their full defined benefit pensions as they turn 60.

"The success of auto-enrolment in ensuring that millions more people have become members of pension schemes with employer contributions needs to be built on to ensure that these lead to decent incomes in retirement."