UK - Remuneration arrangements at FTSE 100 companies must be more transparent, with direct links between a director's performance and his pension payment, the National Association of Pension Funds (NAPF) has urged in the wake of a new report.

Examining the pension savings of more than 360 directors at the UK's largest companies, union TUC found that the average pot measured £3.9bn, with Jeroen van der Veer of Royal Dutch Shell amassing the largest pot of more than £21m.

The union's PensionWatch survey also found that while nearly 60% of FTSE 100 companies still offer directors defined benefit (DB) arrangements, only 40% of directors made use of such schemes.

Instead, just over a third take advantage of defined contribution (DC) arrangements, while a similar amount often receive cash in lieu of pension contributions.

A previous survey by consultancy LCP speculated the tendency to pay cash would grow in future, as companies adapted to new laws governing the maximum size of pension pots.

The TUC also noted that directors still paying into a DB scheme benefitted from an above-average accrual rate of 1/30th, while many UK schemes offer only 1/60th or 1/70th.

Additionally, a company paid an average of £161,000 toward the DC savings of a director.

TUC general secretary Brendan Barber called for a new approach to remuneration committees, allowing employees a voice on the payments, while the NAPF called for increased transparency about payments.

In other news, the Office of National Statistics (ONS) has found that the number of people saving into a personal pension has fallen sharply, while overall contributions have also declined.

The ONS said total contributions to personal and stakeholder pensions fell from £20.9bn (€23.8bn) in 2007-08 to £18.7bn in 2009-10 due to a "fall in the number of people contributing during the recession".

Total contributions to private pensions rose to £85.6bn in 2009 from £83.2bn in 2008, driven by a recovery in employer contributions to funded occupational pension schemes after the recession, according to the statistics bureau.

Darren Philp, director of policy at the NAPF, said: "It is understandable people have more pressing financial priorities during difficult times, but contributing to a pension regularly is vital to ensure a decent income in retirement.

"The UK's population is on a collision course with its own retirement. People are not saving enough, and millions risk facing poverty in their old age."

Lastly, the NAPF has argued that accounting standards used to calculate companies' pensions assets and liabilities are "undermining pensions provision".

The association said the current mark-to-market standards of accounting not only were "inappropriate" for assessing long-term liabilities, but could also lead to "unintended consequences".

Mark-to-market introduces short-term volatility into the measurement of companies' pension surpluses and deficits, which is "at odds" with the long-term nature of pension schemes, the report says.

It adds: "This volatility has led companies to close perfectly viable pension schemes, and has encouraged schemes to adopt extremely cautious investment policies.

"This, in turn, has led to an increase in the cost of pension provision and a misallocation of investment in the economy through excessive investment in low-return government bonds."

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