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Company bosses shun pensions for cash

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Senior executives are choosing cash payments over pension contributions in record numbers, the Trades Union Conference has warned.

The Financial Times reports the TUC’s concerns following research it carried out into cash payments in lieu of pension contributions.

The TUC found that among the FTSE 100, a total of £34m was paid in cash to senior staff over the past financial year rather than being paid into a pension.

A record 70 per cent of 316 FTSE 100 directors chose cash over pension saving.

The highest cash sum paid in lieu of a pension contribution was £3.2m, paid to InterContinental Hotel Group chief executive Richard Solomons.

TUC general secretary Frances O’Grady warns this attitude to pension saving could feed down into the kind of pensions companies provide for workers lower down the chain.

She says: “While pension benefits for most workers have been drastically cut back in recent years, FTSE bosses are diverting pension contributions to top up what are already colossal pay packets.

“If senior executives continue to detach themselves from the pension schemes that their employees rely on, they will be less likely to take an active interest in schemes’ quality and adequacy.”

The TUC also found that where pension contributions were made by employers, company bosses would typically get 34 per cent of salary, compared with 6.1 per cent for workers paying into a defined contribution scheme.

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. Could this be partly due to the fact that they are already max funded for pension?

  2. Has it not occurred to Francis O’Grady that this might possibly be a result of all the reductions in the Lifetime Allowance? It will only get worse as well with the new £10k annual allowance that all of these bosses will be subject to next year.
    I am also pretty sure I didn’t hear the Unions complaining when these measures were being introduced that it would lead to bosses being divorced from the pension schemes of their staff! Indeed, most will have been championing the fact that the rich were having their generous tax breaks reigned in!

  3. Spot on Kevin. Also it is worth noting that the higher paid have until recently put by far the greater amount into pensions. The providers are in for a cold bath. Their membership numbers may increase through AE, but they will be collecting pennies instead of pounds and the total take will be a whole lot less.

    Cash payments to higher earners will lead to more flexibility and doubtless some of this money will now find its way abroad – so UK Plc loses out twice (and even three times) over.

  4. Well I never – what a surprise!

    How many industry pundits could possibly have seen that one coming?

    Welcome to the real world, where, when turkeys vote for Christmas……guess what happens…

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