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03 September 2006

Survey exposes FTSE 100 directors' luxury pension packages
While millions of workers face belt-tightening in their retirement, a new survey by Labour Research magazine has uncovered details of the super-enhanced pension arrangements of the UK FTSE 100's top executives. They can look forward to retiring on at least 71 times the basic state pension for a married couple and can typically stop working at 60 without incurring any financial penalties.

In response to the government's Pensions White Paper, former CBI director-general Sir Digby Jones said: "The price for a better pension is a higher state pension age, which the government rightly recognises will have to rise gradually over the long-term."

But the case for FTSE 100 directors is altogether different. A total of 112 FTSE 100 company directors are currently entitled to a pension worth at least ?200,000 a year. Twenty-seven of them can expect a pension of at least ?500,000 a year (see table below) - the equivalent of ?9,615 a week, 71 times the basic state pension for a married couple.

Top of the table of high pension earners is Lord Browne, chief executive of oil multinational BP, who would be on ?991,000 or ?19,058 a week if he retired tomorrow. He is also eligible for a lump sum equal to a year's basic salary - if he stands down in late 2008 as expected, this will be worth around ?1.5 million.

The survey found that FTSE 100 directors can typically retire at 60 on a full pension. Those at pharmaceutical giant AstraZeneca can retire as early as 50 if it is at the company's request, while directors of financial services provider Friends Provident and energy group BG can retire at 55 with no reduction in their pension. Meanwhile if proposals in the government's Pensions White Paper are adopted, by 2044 most workers will be expected to keep working until they are 68.

Over three-quarters (77) of the companies that make up the FTSE 100 index still have "final salary" schemes for their directors. These findings come at a time when many companies have been closing their final salary schemes to new employees. The remainder of the directors in the FTSE 100 have "defined contribution" schemes. These pensions are open to fluctuations in the stock market but it is unlikely that they will face a difficult retirement - mining group Xstrata more than tripled its contributions to chief executive Mick Davis's defined contribution plan last year, putting in ?1.08 million.

Neal Moister, researcher for the Labour Research Department, who carried out the survey, said:

"It is very hypocritical for so many senior business figures to advocate pushing the state pension age up and up while they negotiate a completely different set of rules for themselves. Many low-paid workers will have to work for many more years to receive a basic pension while FTSE 100 directors can look forward to a luxury retirement from the age of 60 if not younger."

FTSE 100 directors with pensions of ?500k +
Director Company (year end) Annual pension ?000
Lord Browne BP (12.05) 991
Sir Francis Mackay Compass (12.05) 830
Howard S Frank Carnival (11.05) 795
John Sunderland (1) Cadbury Schweppes (12.05) 762
Antony Burgmans Unilever (12.05) 762
Lawrence Fish Royal Bank of Scotland (12.05) 761
John Walsh (2) BOC (9.05) 714
Michael Bailey Compass (12.05) 648
Jeroen van der Veer Royal Dutch Shell (12.05) 647
Sir Tom Mckillop AstraZeneca (12.05) 639
Patrick Cescau Unilever (12.05) 638
Todd Stitzer Cadbury Schweppes (12.05) 623
Sir Julian Horn-Smith Vodafone (3.06) 605
Dr Jean-Pierre Garnier GlaxoSmithKline (12.05) 601
Michael Geoghegan HSBC (12.05) 557
Paul Walsh Diageo (6.05) 556
James Crosby HBOS (12.05) 553
Sir John Bond HSBC (12.05) 546
Sir Terry Leahy Tesco (2.06) 546
Keki Dadiseth (1) Unilever (12.05) 542
Sir David Prosser Legal & General (12.05) 537
Richard Harvey Aviva (12.05) 527
Mike Turner BAE Systems (12.05) 523
Dr John McAdam ICI (12.05) 521
Ken Hydon? Vodafone (3.06) 517
Roger Urwin (1) National Grid (3.06) 516
Rudy Markham Unilever (12.05) 514

(1) Retired 2005
(2) Resigned 2005

The survey results are based on the remuneration reports of the FTSE 100 companies.

The full article appears in the September 2006 edition of Labour Research magazine.

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