UK - A new report has criticised the level of executive pensions across FTSE 350 companies, arguing that directors' pay has risen "exponentially" as defined benefit (DB) schemes closed down to employees.

The High Pay Commission report - 'Directors' Pensions: In It for Themselves?' - found that while 97% of FTSE 350 companies still offer company-sponsored pension schemes for executives, only one-third extend the same offering to employees.

Criticising the status quo, commission chair Deborah Hargreaves said: "As ever with pay at the top, it is one rule for the workforce, as it is exhorted to put up with a poorer retirement so that companies can stay competitive, and another one for the boardroom, where generosity remains unchecked."

She further noted that many directors had now reached the limit of their pension pot - recently reduced by the UK government to only £50,000 per annum tax free or a total of £1.5m - and instead opted for cash payments.

This mirrors findings by LCP, which last month found that more than half of executives recruited this year were offered cash payments in lieu of pension contributions.

The report found that almost a quarter of FTSE 100 executives make pension payments into both DB and defined contribution (DC) schemes, as well as receiving cash supplements, while only 4.1% only receive cash payments.

In FTSE 250 companies, the situation is reversed, with the largest share of executives (33.7%) only paying into DC schemes, almost 13 percentage points higher than when investigating FTSE 100 companies.

Finally, Atkin Trustees has urged for pension boards to have procedures in place to tackle potential conflicts of interest between trustees and sponsoring companies.

Richard Bryant, head of trustee services, highlighted the importance of conflicts of interest in light of DB scheme closures.

"Employers and trustees should push for a situation where either there are no conflicts of interest or everyone on the trustee board knows exactly where they stand and where the others are coming from," he said. "This would result in far fewer confrontations and a speedier decision making process."

He suggested that, instead of trustees nominated by either the company or members, there should be pensions committees selected by each group, tasked with supporting the remaining trustees.

"These individuals would know exactly where they stand and would support the trustee board, made up of non-conflicted individuals," he said.

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