date: 5 September 2007

embargo: 00:01hrs Thursday 6 September 2007

UK top bosses retire at 60 with a £3 million pension pot

Directors of the UK's top companies have amassed pensions worth nearly £1 billion (£891m), according to the annual TUC PensionsWatch survey published today (Thursday).

The TUC's analysis of boardroom pensions, drawn from information supplied in the annual reports of 102 top companies shows that the average executive can retire at 60 on a final salary pension worth over £3 million, up £300,000 in a year. This is enough to provide a pension of £193,000 a year - more than 25 times the average occupational pension of £7,500 a year and an increase of 15 per cent in a year on the findings of last year's survey.

Looking just at the director with the biggest pension in each company, their average pension is worth £5.3 million, up £400,000 in a year. This is enough to pay out a pension of £320,000 - over 42 times more than most staff pensions - and an increase of 10 per cent since last year.

The biggest final salary pension pot in the survey tops £21 million - £2 million more than the biggest last year - and would pay the director over £1 million a year. Five directors have a pension pot worth over £12 million.

Only a minority of the companies have money purchase (rather than salary related) pensions for at least some of their directors. But these can also be extremely generous - one director received nearly £1 million in a year and three others had more than £300,000 paid into their scheme.

TUC General Secretary Brendan Barber said: 'Britain's boardroom bonanza does not stop on retirement. Too many top directors have gone on closing or cutting schemes for their workforce, while keeping gold-plated pensions for themselves.

'Even if top directors were in the same scheme as their workforce they would still get big pensions because their pay is so much greater than those of the staff they employ. But this is not enough for many top bosses; they need to have a guaranteed extra on top.

'Top executive pay has already created a new group of the super-rich who float free from the rest of society. This report shows that this does not stop with their retirement.'

The full text of the Pensions Watch report can be found at www.tuc.org.uk/extras/pensionswatch2007.pdf

Key PensionsWatch 2007 findings:

• Directors of the UK's top companies share pensions with guaranteed pay-outs (known as defined benefits, DB, or final salary schemes) worth nearly £1 billion (£891 million). On average each director's pension is worth £3 million. The average for directors with the largest pension in each company is £5.3 million.
• The average director's DB pension would pay out more than £193,000 a year, 25 times the average occupational pension. For the directors with the biggest pension in each company, the average would be over £320,000 a year, over 42 times the average for all employees (£7,592).
• The proportion of directors with final salary pensions is 79 per cent.
• 59% of companies have closed final salary schemes to new staff in recent years.
• 38 out of the 49 companies where information is available (78%) allow directors to retire on a full pension at 60.
• For companies who reveal the information, directors' pensions grow twice as fast (1/30ths) as the most common rate for employees in DB schemes (1/60ths), meaning that it takes staff 40 years, on average, to reach full pension but directors only half that time.
• Where directors are in money purchase schemes, where the pension will depend on the ups and downs of investments (defined contribution or DC), the average reported annual employer contribution is £86,000. The average for company directors receiving the highest payment in each company is £147,000. Employer contributions to directors' DC schemes was, on average, the equivalent of around 20% cent of salary, compared to the average for all employees with a DC scheme and employer contributions of just 5.8 per cent.
• The highest annual employer contribution to a director's defined contribution pension was £988,732, the rest of the five biggest annual contributions range from £261,000 - £382,000.

NOTES TO EDITORS:

-The PensionsWatch 2007 report examined the staff and director pension provisions at 102 of the top UK companies, a combination of the FTSE 100 and other large employers. Details are recorded for directors with DB pensions at 86 companies and DC pensions at 47 companies (31 of the 102 companies provide DB and DC schemes).

Contacts:

Media enquiries: Elly Brenchley T: 020 7467 1337; M: 07900 910624;
E: ebrenchley@tuc.org.uk

Liz Chinchen T: 020 7467 1248; M: 07778 158175; E: media@tuc.org.uk

Press release (800 words) issued 6 Sep 2007