Knives out for executive pensions

Executives must be tired of justifying their pay packets these days. Last week the shouts of ‘Babylonian excess’ were aimed at boardroom salaries and City bonuses.

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Last Updated: 31 Aug 2010

News was that that both have continued their record-breaking rise. But it doesn’t stop there. Now comes concern that the directors of the UK’s top companies can retire with pensions worth £891m. That’ll buy a lot of gardening gloves and Werther’s Originals.

According to a report by the TUC, the average company executive can now hang up their boots at 60 on a final salary pension worth more than £3m – which works out at £193,000 a year. That’s up 15% on last year. The negative reaction is perhaps understandable, especially when the average UK pension sits at £7,500 a year. In fact, the biggest executive pensions, worth £320,000 a year, are more than 42 times the average staff pensions. It doesn’t help that widespread pension fears have recently sparked strikes in public-facing organisations such as the Post Office and tube operator Metronet – whose action this week threw Londoners into ‘Tube hell’.

The wealth gap argument has always been a hot potato, and probably always will. On one side you have the argument that wealthy people in a free society are creating jobs, contributing to the economy and bolstering the exchequer through almighty taxes; on the other disbelief that a company executive is really 40 times more important than a cleaner, as their relative salaries would suggest. MT’s editor found this out recently when he faced off against Polly Toynbee, a famous wealth cynic, in a radio debate.

It's a complex issue, and one that will continue to rumble on. Not that this should bother these bus-pass millionaires as they chip away at their handicap and get down to the weeding.

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