The size of the pensions accrued by company directors has been criticised by trade union leaders, as financial advisers predict further falls in annuity rates.
The annual TUC (Trade Union Congress) PensionWatch survey, published on 9 September, said in the top 102 UK companies, the average value of a director’s pension was £3.8million.
The survey, which analyses the pension arrangements in place for directors, found an increase in value of £400,000, with an average annual value of pensions at £227,726.
The TUC said this made the average director’s pension 26 times higher than the average occupational pension of £8,736, and despite defined benefit schemes closing for most employees, the majority of directors are still in defined benefit schemes.
TUC general secretary, Brendan Barber, said: “While boardrooms are still paved with pensions gold, most staff now get no employer pension support, and even the minority who do have seen big cuts in pensions provision schemes have closed or had benefits reduced.”
The TUC is calling for greater clarity in the reporting of pensions to allow shareholders to scutinise directors' arrangements to ensure they are fair and reasonable.
The National Association of Pension Funds supported the call for greater transparency.
NAPF chief executive, Joanne Segars, said: “Special arrangements like lower retirement ages and higher contribution rates need to be explained. We need much more transparency in this area. Everybody deserves a good workplace pension.”
The NAPF said director’s pensions were not normally linked to performance and investors needed more information about schemes to hold management to account.
Concerns about the disparity between directors pensions and the pension schemes available to the majority of workers, comes as annuity rates are predicted to continue to fall.
The value of annuities, the income paid from a pension pot, fell over the summer months and independent financial advisers have now predicted further falls.
A survey of IFAs specialising in this area, carried out by retirement income firm MGM Advantage, found 82 per cent of IFAs expect annuity rates to fall over the next five years. Of the 44 IFAs surveyed, 25 per cent predicted a fall of between 7.5 and 10 per cent.
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