MPs have questioned pension levels of senior executives at Lloyds Bank after it emerged their contribution rates were double that of other employees.
Chairmen of the Work and Pensions committee and the Business, Energy and Industrial Strategy committee, Frank Field and Rachel Reeves, have written to the chairman of Lloyds’ remuneration committee asking why CEO António Horta-Osório's pension contribution rate was 33 per cent when the maximum level for other Lloyds employees is 13 per cent.
They also highlighted the point that Mr Horta-Osório was previously the only employee with a final salary pension and queried why the contribution rate for Lloyds’ chief operating and financial officers was higher than other employees' at 25 per cent.
Furthermore they questioned whether Mr Horta-Osório’s fixed share award increase, to £1.05m, was "in the spirit of the Investment Association’s guidelines".
The two chairmen have also written to the Investment Association with questions on the guidelines.
These include whether there has been any resistance to its guidelines on executive pensions and whether it would be worthwhile for the restrictions on executive pension contributions to be put into law rather than just being guidelines.
The IA guidelines and the Corporate Governance Code state that pension contribution rates for executive directors should be aligned with those of the workforce.
Responses to the letters will be published in due course.
In March 2019, the Work and Pensions select committee considered launching an inquiry into executives’ pension payments, after companies came under fire for failing to align these with the rest of their staff.
The BEIS committee published a report saying that companies must do more to link top bosses’ pay to that of the rest of their workforce.
The report recommended that the regulator due to replace the Financial Reporting Council should seek public explanations from any company that fails to do this.
It stated that chief executives in FTSE 100 companies have enjoyed rates of about 25 to 30 per cent of pension contributions, whereas their employees received only 9 to 10 per cent.
amy.austin@ft.com
