Thursday, 9 September 2010

Diamond-studded, platinum-plated pensions

The TUC's annual report on directors' pensions is out today. Here are the headline stats-

The TUC's eighth annual PensionsWatch survey, which analyses the pension arrangements of 329 directors from 102 of the UK's top companies, shows that the average transfer value for a director's pension is £3.8 million, an increase of £400,000 since last year, providing an average annual pension of £227,726.
The highest paid directors in each company have pension pots worth £5.26 million, providing an average annual pension of £298,503. The largest pension pot in this year's survey is worth over £21million and would pay out an annual pension worth over £1.3million.
PensionsWatch shows that the average director's pension is now 26 times the average occupational pension (£8,736) - a fall on last year but still higher than the pre-recession gap.
The survey shows that despite companies continuing to move away from defined benefit (DB) schemes for ordinary staff, the majority (54 per cent) of top directors are still in DB schemes and many directors are in more than one scheme. Nearly two third of companies (63.5 per cent) provide DB schemes for at least some directors. The most common accrual rate was 1/30th - far more generous than the 1/60th to 1/80th typical for the majority of ordinary scheme members.
For directors in defined contribution (DC) schemes, the average company contribution was £134,760 and the average contribution rate was 19 per cent, around three times the rates normally available to employees (6.7 per cent).
Many directors not participating in company schemes receive cash payments instead. Nearly one in three directors (31 per cent) received cash payments either in place of participation in a company scheme or as top-ups. The average cash payment was £120,906 and the highest in the survey was £420,000.
A further 25 directors also received payments into personal pensions plans, worth an average of £181,072.
While ordinary workers are facing the prospect of working longer, with the Government planning to raise the state retirement age to 66 in 2016, most directors in DB schemes have a pension age of 60.

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