UK bosses “persist with DB schemes”
UK – Corporate directors in the UK are keeping their defined benefit pension schemes while closing them for workers, the main trade union body in the UK says.
“Top directors who have been closing generous final salary pensions and replacing them with inferior defined contribution schemes for their staff have hung on to their own more generous pensions,” said the Trades Union Congress.
The comments earned a riposte from the Institute of Directors, which said the unions should embrace reform of public sector pensions.
The TUC has surveyed the UK top 121 companies and found that 70.5% of directors still give themselves final salary pensions, while 13.5% are in defined contribution schemes.
It added that 58% of the firms who have closed their final salary schemes to new staff still allow new directors to join a final salary scheme.
“There is a deep and growing divide between the types of pension benefits that staff can expect and those that are offered to company directors,” the report says.
The average director's pension fund in a final salary scheme is now worth 2.3 million pounds, the TUC says. Taking just the director with the biggest pension into account then the average rises to 4.6 million pounds.
And it says that directors' final salary schemes are more generous than those for staff.
"This is a case of top directors tightening other people's belts not their own," said TUC general secretary Brendan Barber. "It is a straightforward case of boardroom hypocrisy, directors are feathering their own pensions nests.”
Derek Brownlee, pensions executive at the Institute of Directors, said the TUC was wrong to assume that defined contribution pensions are inferior to defined benefit schemes.
“Our own forthcoming survey on pensions, which covered four times as many companies as the TUC's report (including the small and medium sized companies which employ huge numbers of people, but which the TUC has conveniently ignored), shows a different picture with only one-third of companies offering a different type of pension for senior staff.”
He said the “real gulf in pensions” is between private and public sector workers. "If the TUC really wants to end "feather bedding" and "hypocrisy" in pensions it could start by embracing a fairly modest reform of public sector pensions it has so far opposed: aligning the retirement age in the public sector with the rest of the workforce."