Directors of the leading companies in the UK are enjoying pension pots worth an average of £3.8m, says the TUC in its newly published PensionsWatch survey.

The annual survey has revealed that the average transfer value for a director’s pension has increased by £400,000 since last year, resulting in an average annual pension of £227,726. Notably, the average director’s pension is now 26 times the size of an average occupational pension of £8,736. The largest pension pot in this year’s research is worth over £21m, which would pay out an annual pension of over £1.3m.

“Employers often tell us that decent staff pension schemes are no longer affordable,” commented Brendan Barber, TUC general secretary.

“Directors’ representatives are in the vanguard of those attacking public sector pensions. Yet greed is still good in the nation’s top boardrooms where directors continue to reward themselves with seven figure pension pots.

“Top bosses justify their pensions, pay and bonuses as rewards for success. Yet many companies refuse to fully disclose these lavish arrangements either to shareholders or to their own members of staff.

“While boardrooms are still paved with pensions gold, most staff now get no employer pension support, and even the minority who do have seen big cuts in pensions provision as schemes have closed or had benefits reduced. Companies should offer all their staff the same pension arrangements and put an end to this unfair two-tier pension system.”

The TUC’s PensionsWatch survey also reported that while ordinary employees face longer working lives, most directors in defined benefit pension schemes still have a pension age of 60.

Greater clarity in the reporting of pensions – including the mandatory disclosure of accrual and contribution rates – is needed, according to the TUC, in order to ensure that the pension arrangements of the top bosses are fair and reasonable.

Joanne Segars, chief executive at the National Association of Pension Funds (NAPF), added that while it makes sense that higher earners accrue bigger retirement pots, they have some real concerns about this issue. For example, special arrangements such as lower retirement ages and higher contribution rates need to be explained.

“It is also worrying that directors’ pensions are not usually linked to performance,” Segars continued. “This could mean bosses are rewarded in their retirement despite failure in the job. Pensions must not become a back-door to boosting pay.

“Investors such as pension funds need more information about these schemes if they are to hold management to account. We hope that companies will be more upfront about boardroom retirement deals.”

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