Shareholder pressure means FTSE 100 executives are under pressure to trim back their retirement perks.
Executives at almost all FTSE 100 companies have accepted less generous pension deals after pressure from shareholders about huge payouts.
The move follows longstanding calls to bring high-flyers’ retirement packages more in line with those received by most of their employees.
The scale of the gap between executive and worker pension contributions is laid bare in the reluctance of some of the index’s corporate giants to act against excessive executive pay.
Ten FTSE 100 companies have at least one existing director receiving a pension contribution of 25% or more with no commitment to align this with the rest of the workforce by the end of 2022.
The autoenrolment minimum pension contribution is 8%, with 5% paid by the employee and just 3% paid by the employer.
Data on the 2020 AGM season, published by the Investment Association (IA), reveals 98% of FTSE 100 companies have now either aligned the pension contributions of new directors with that of the workforce or have committed to doing so.
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Fourteen FTSE 100 companies cut pension contributions for existing directors during the year, and a further 43 committed to reduce contributions in future years.
Six of the UK’s biggest companies are increasing their workforce rate as part of their effort to align staff pension contributions with those of the directors.
Chris Cummings, CEO of the Investment Association, said: “Providing directors with the same pension contributions as the rest of the workforce is fundamentally an issue of fairness.
“Given the economic difficulties many people across the UK are facing, it is only right that the majority of FTSE 100 companies are now aligning their executive pension contributions with their workforce.”
An online survey amongst interactive investor website visitors (attracting 827 responses between 29-30 September), found more than two in every three investors (68%) believe FTSE 100 bosses are overpaid.
Executive pay is facing even greater scrutiny with falling incomes and rising unemployment due to Covid-19, which is hitting individuals’ retirement pots.
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Research from Royal London in August suggested two in five (40%) millennials aged 18-34 have either stopped (12%) or reduced (28%) their pension contributions as a result of coronavirus.
It also found nearly one in five (18%) people have stopped or reduced contributions on other savings/investment products as a result of the pandemic, with those under 35 more likely to have stopped or reduced (29%).
Business Minister, Lord Callanan said: “No executive should be building up an exorbitant pension fund far and above the majority of their workforce, particularly during this testing time.
“I am really pleased to see the progress the vast majority of FTSE 100 companies have made towards bringing their executive pension contributions in line with the wider workforce, and would urge each and every business on the list to ensure plans are in place by 2022.”
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