Directors of the UK's top companies have built up pension pots worth an average of £4.3 million, according to the TUC's tenth annual PensionsWatch survey published on 6 September.
PensionsWatch, which analyses the pension arrangements of 351 directors from FTSE 100 companies, shows that the average transfer value (pension pot) for a director's defined benefit (DB) pension has increased by £400,000 over the last year to reach £4.33 million - providing an annual pension of £240,191. The biggest pension pot in this year's survey is worth £19.4 million.
The total value of the 144 directors' DB pension pots analysed in PensionsWatch is £600 million.
PensionsWatch shows that the value of the average director's pension has increased faster than most ordinary pension schemes and is now 24.4 times the size of the average occupational pension (£9,828).
The survey finds that the average company contribution to directors' defined contribution (DC) pensions is £144,508. The average employer contribution rate to a director's pension (as a percentage of salary) is 22 per cent. This is nearly four times the size of the average employer contribution rate (six per cent) in DC pensions. The figure is also more than seven times the size of the maximum employer contribution required under the new automatic enrolment regime that will start being phased in for all workers from next month.
An increasing number of top directors now receive cash payments instead of participating in company pension schemes. The average cash payment was £164,925, an increase of £26,489 on last year. The biggest cash payment was £818,594.
The most common Normal Retirement Age (NRA) for senior executives is 60, with three times as many directors able to retire at 60 than 65. In contrast, the most common NRA for ordinary scheme members is 65, a figure which is expected to rise further.
The ever-increasing value of directors' pensions is in sharp contrast to the fortunes of the pensions of most ordinary workers, with the number of employees saving in employer-backed schemes falling every year.
As pensions are generally not performance-related, the TUC believes there is no case for the stark differences between the pension terms enjoyed by directors and those offered to the rest of the workforce.
Private sector companies should follow the example of the public sector, where there are no platinum-style boardroom pensions and all staff are members of the same pension scheme and enjoy the same benefits, says the TUC. Indeed in public sector schemes, better paid employees pay higher percentage contributions from their pay than lower paid workers.
Executive pay and bonuses have been under close scrutiny recently, forcing the government to look into possible reforms. But the TUC report says that because of the confusing and sometimes misleading reporting of directors' pensions, the scale of executive excess has largely escaped the attention of shareholders and the media. The TUC is calling for greater clarity in the reporting of pensions, including the mandatory disclosure of accrual and contribution rates.
The TUC wants to see a legal requirement for more comprehensive reporting on company pension provision for directors and employees in company annual reports. The government is currently consulting on revisions to remuneration reporting regulations, and changes to pensions reporting should be included as part of these reforms.
Pensions will be a hot topic at the 144th annual Congress ( 9-12 September), when unions will debate the acceleration of the increase in the State Pension Age (SPA), condemn attacks on the pensions of workers across the public and private sectors, and call for a restoration of trust in the pensions system by tackling hidden and excessive charges.
TUC General Secretary Brendan Barber said: "Companies continue to chip away at the pensions of ordinary workers while awarding their directors solid platinum pensions worth hundreds of thousands of pounds a year.
"Top executives already enjoy huge pay packages that go up every year irrespective of the success of their company or the state of the economy. These salaries alone guarantee lucrative pensions so the generous packages uncovered are an insult to the vast majority of workers who are denied such favourable terms.
"The gap between the pensions of top directors and everyone else does not just reflect the excess of the super-rich, but shows just how poor pensions are for ordinary workers in the private sector, where more than two out of three get no employer pension help."
He concluded: "Automatic enrolment is a great advance as it will make employers contribute to pensions for the first time, but we need to see employers offering more than the bare minimum if we are to avoid a growing pensioner poverty crisis."