FTSE 100 executives enjoy pension packages that are three times the size of those of FTSE 250 bosses, reports Lane Clark & Peacock (LCP), with the new pension tax expected to cost FTSE 250 bosses £33,000 a year.

Mid-cap company bosses and their blue chip company peers are experiencing an increasing gap, said the consulting actuaries, with the average FTSE 250 executive directors receiving £87,000 in pension contributions last year. FTSE 100 bosses receive £267,000 on average in comparison.

The report showed that only a third of FTSE 250 executives receive some or all of their pensions through a defined benefit (DB) arrangement, whereas more than half of FTSE 100 bosses benefit from DB.

“There is a yawning gap between the pensions of FTSE 100 and FTSE 250 executives – FTSE 100 pensions are worth treble in money terms and double when calculated as a percentage of basic salary,” explained Mark Jackson, LCP partner. “The main reason is that FTSE 250 companies are further down the track in moving from DB to less generous defined contribution (DC) pension schemes. As more and more FTSE 100 companies turn their back on DB pensions, however, we expect the gap to narrow – the difference between DC pensions for FTSE 100 and FTSE 250 executives is less marked.”

LCP has also calculated that the Emergency Budget announcement, that the Chancellor will work to develop proposals for an annual allowance on pension contributions, set somewhere around the £30,000 to £45,000 mark, could cost a typical FTSE 250 director £33,000 a year at the upper limit.

“If the annual allowance is set at £45,000, the Treasury will need more than 100,000 people like the typical executive in our survey to raise the £3.5bn in new tax revenue,” Jackson said.

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