The directors of the top UK companies retire on pensions of £175,000 a year, it has been revealed by the High Pay Commission (HPC). Some of these directors receive cash supplements instead of pensions, while those FTSE 100 directors who do have pensions get them at up to 29 times the amount of the everyday worker.
This information has been revealed as pension schemes nationwide are being reformed. The HPC disclosed that 97% of the FTSE 350 companies have kept these schemes for directors but only 33% have kept them for regular workers.
Chairwoman Deborah Hargreaves disclosed that many directors receive cash supplements instead of pensions. She explained the issue, stating, “Employees are being called on to cut back as employers cut costs. What we are highlighting is that directors are looking after themselves.”
Top rate pensions have had some form of reform, with changes in regulations regarding tax relief. However, Ms. Hargreaves suggested that the government consider further changes for pension reform for top earners.
The Office for National Statistics has revealed that those on the lowest pay scales are the least likely to even be members of pension schemes in the workplace. This means they have no provisions at all.
Companies are saving billions of pounds in the UK by transferring pensions from the Retail Prices Index (RPI) to the Consumer Prices Index (CPI), which has less relation to inflation, meaning consumers are less protected. This does not take earnings into consideration either, and is being changed for all employees.
However, not all companies can switch from RPI to CPI, as some rules prevent this change in regulation. If the companies do not have the regulation in fine print, they have made the switch however.
Public sector pensions have also come under reform, with the government announcing increased contributions from employees. Those earning under £15,000 and working in the NHS, civil service, and teaching staff, are protected, but those who earn more are not.
This is contrary to the high pensions seen by directors of the FTSE 100 companies, which are sure to be upsetting to consumers with lower pension funds in retirement.