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An estimated
forty per cent of senior executives are enrolled in a final salary
pension scheme with a 1/45th accrual rate.
The figures come from Xafinity’s annual Consulting Executive
Retirement Benefits Survey, which questioned 3,000 senior HR
managers and directors across the UK. The survey found that retirement
provision varies greatly between senior executives and other employees.
However, the study also showed that there has been a clear convergence
of benefits between executives and other employees, as only 29 per
cent of those companies surveyed now offer a higher level or difference
type of retirement benefit to its executive directors or senior
executives, down by 15 per cent from last year.
Xafinity discovered that over 50 per cent of executives receive
an employer contribution of less than ten per cent and over 75 per
cent receive less than 15 per cent, which the organisation said
is unlikely to provide a retirement pension that will meet the historic
expectations of senior executives.
The self-invested pension plan (SIPP) has seen an increase in popularity
according to the survey, with 25 per cent of employers now offering
this option to senior executives.
Managing director at Xafinity, Robert Birmingham, commented: “It
is evident from this year’s results that there is a continuing
trend towards the convergence of benefits for senior executives
with those of other employees. With DC being more widely used for
future service provision the true impact of this change on retirement
pensions for senior executives may take several years to emerge.
However, unless we see substantive increases in DC contribution
levels we can anticipate that many senior executives will find that
their retirement funds are unable to purchase pensions anywhere
near the levels enjoyed by the previous generations of executive.”
- Pensions Age
August 2008
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