UK business bosses are pumping millions into their own pension funds while cutting the amount received by employees for their retirement schemes, a new report has found.
The Trades Union Congress’ (TUC) latest PensionsWatch survey found that over half of company directors accrued their pension at 1/30th of salary a year, compared with just 1/60th of most employees’ pay.
The TUC said that this discrepancy means that a director with 20 years service could retire on a full pension while a typical employee would need to work twice as long.
The report also found that two-thirds of company directors had final salary pension schemes, with contribution rates between three and five times higher than the normal rate for staff.
These findings are unlikely to ease the pensions crisis for small firms, who may soon have to deal with compulsory pension contributions following pressure on the government from trade unions.
Ministers aim to defuse the ‘ticking pensions timebomb’ by forcing employers to pay out on schemes, even if they have become insolvent, and encouraging employees to work later in life, therefore delaying retirement ages.
Brendan Barber, general secretary of the TUC, said that employee and director pensions should be disclosed in company annual reports to aid transparency.
“It smacks of double standards for Britain’s boardrooms to be stuffing their pensions to the brim while staff pensions schemes are being closed because they are too ‘costly’ or are receiving paltry contributions.
“There is simply no good reason for Britain’s top directors’ to give their pensions the VIP treatment on top of the huge salaries they are paying themselves. Too many have their snouts in the pensions trough,” he said.
