Top company executives continue to enjoy substantial retirement benefits, highlighting how differences in pension provision means that pay inequalities are amplified in retirement, Frances O’Grady has said.
A nine-page report published by the union looked at trends in the retirement provisions of 316 top executives of FTSE 100 firms, by looking at their annual reports.
According to the TUC, the average employer contribution to senior executives’ pensions in the past year was 34.1 per cent of their salary.
“Everybody deserves security in retirement. But while pension benefits for most workers have been drastically cut back in recent years, FTSE bosses are diverting pension contributions to top-up what are already colossal pay packets,” the TUC general secretary said.
“Given how high executive salaries are, these payments can be enormous, and in some cases the contribution is more than 50 per cent of the salary,” she added.
The report showed that the typical employer contribution for a worker in a defined contribution pension scheme was 6.1 per cent, highlighting that these schemes carried more risk than a defined benefit scheme, while 14 per cent of top bosses have all their pension contributions paid into DC schemes.
Blair Cann, senior partner and financial planner at Hertfordshire-based M Thurlow Brokers, said: “The TUC seems to be losing sight that pensions are deferred salaries, so if there is a big discrepancy between the salary of the top earners, and that of their workers then obviously there will be a big difference between retirement benefits.
“Cash top-ups are fully taxable so I do not understand the TUC’s objection. If it were a tax avoidance issue then I would understand the TUC’s complaint, but otherwise I disagree.”