UK - Tax changes introduced last year have led to lower pension costs for large companies, according to a survey from LCP.
The FTSE 250 Executive Pensions Survey 2012 shows that the cost of providing a pension within the average remuneration package of a FTSE 250 executive has fallen by one-fifth since the survey was last carried out in 2010.
The average pension cost is now £68,000 (€85,120), down from £87,000 in 2010.
LCP says the drop is largely attributable to the new tax limits on pension savings introduced in April 2011, which capped the annual pension allowance at £50,000 and lifetime allowance at £1.5m.
"This has forced companies to introduce more flexible forms of pension compensation, accelerating the move away from higher-value DB provision," the survey said.
It added that the new-style compensation includes an element of defined contribution alongside cash supplements.
Across the FTSE 250, this type of flexible pension compensation is now in place for 20% of executives, compared with 3% just two years ago.
The survey also shows that this increased flexibility has increased the burden on executives to plan carefully and make annual decisions relating to their pension savings in order to avoid unexpected tax bills or miss tax relief.
One in three executives has annual pension savings in registered pension schemes that exceed the annual allowance of £50,000, risking sizeable tax payments.
The survey says the stark differences between the pension compensation of FTSE 100 and FTSE 250 executives still remain.
The pension cost to the employer for the average FTSE 100 executive is three times that of their FTSE 250 peer, standing at £225,000 per year.
The historical disparity between different industry sectors within the FTSE 250 is, however, being ironed out.
Two years ago, pension compensation varied from 6% of total remuneration (financials) to 34% (industrials and consumer goods).
In 2012, this gap has closed considerably. Pension compensation by sector is flatter, ranging from 6% to 12% of total remuneration.
Mark Jackson, partner at LCP and the report's author, said: "The Treasury has achieved its aim - in the old days, executives got tax relief on all their pension compensation, but now they are actually paying tax on it.
"A FTSE 250 executive who cannot shoehorn their pension savings into the new limits is paying £35,000 a year in tax."
Jackson said the changes seen in this year's survey highlighted the need for careful, and annual, pensions planning and decision-making by companies and their senior leaders.
He added: "Irrespective of the tax changes, pensions remain a valuable part of the pay packet of any senior executive, with the knock-on desire for a tax-efficient and practical solution.
"The DB scheme is disappearing, and flexible DC and cash are winning through."