The pay of the Chief Executives, directors and senior managers of private companies has soared far ahead of that of average workers over the past thirty years. Michael Johnson from the Centre for Policy Studies was reported as saying in the Independent, that executive pay has ‘outstripped in an unreasonable way the remuneration of the man in the street’.
These differences in pay (and bonuses) are carrying through into massive differences in the pensions that people can receive when they retire. Directors’ pension pots have soared by 70% in less than a decade.
The TUC’s PensionWatch 2011 survey has shown that the average pension pot for a top company director is £3.91 million – providing an annual pension of £224,121 – more than the Prime Minister or our Council’s Chief Executive earns in a year. This giant pension is 23 times the average occupational pension (£9,568), and 34 times bigger than the average public sector pension (£6,497). Some of the most dramatic examples of big directors’ pension pots are:
- Jeroen van der Veer, former boss of Royal Dutch Shell, with a staggering £21.5m pension pot, which can pay out £1.4m a year.
- Former Barclays boss John Varley has a fund of more than £18m, which can yield £1.2m.
- Sir Frank Chapman, CEO of BG Group, has a fund of more than £16.5m, and
- David Brennan, CEO of AstraZeneca, a fund of £14.7m, both worth more than a million a year.
- Diageo’s CEO Paul Walsh has a fund worth £13.4m, which could pay out more than £930,000 a year if he retired today.
While ensuring that they themselves get high pensions, many company directors have scrapped occupational pension entitlements (particularly ‘final-salary’ schemes) for their workers. They have not even given their workers the chance to join a pension scheme. This move has particularly hit new starters at private firms and younger workers there. Dave Prentis, UNISON General Secretary, has said that two-thirds of private companies ‘do not pay a single penny towards their workers’ pensions’.
The Government, big business and large chunks of the corporate media talk about the need to cut back public-sector pensions and allege that they are ‘gold-plated’. However, this is not true and is a cynical attempt to turn ordinary private sector workers against public servants. The only ‘gold-plated’ pensions are those that exist in the boardrooms of Britain and in the City. And it is they who want to push down our pensions, rather than taking the fairer approach of levelling up provision for their own workers.