Shareholders force executive pension cuts in FTSE 100 companies

Data from the trade body showed 98 per cent of FTSE 100 companies analysed had either aligned executive pension contributions with those of the workforce or had committed to doing so.

During 2020’s annual meeting season, some 14 companies had reduced contributions for existing directors and a further 43 had pledged to reduce contributions in future years.

The figures also showed six companies in the UK’s blue chip index had increased their workforce pension rate as part of their effort to align contributions.

Shareholders have long called for the alignment of pensions within a workforce as an issue of fairness and a way to foster good employee relations.

Chris Cummings, chief executive of the IA, 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.”

Business minister Lord Callanan agreed, adding that no executive should build up an exorbitant pension fund far and above the majority of their workforce, “particularly during this testing time”.

He added: “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.”

But the figures showed there was still work to be done. Some 10 FTSE 100 companies had been flagged by the IA for having at least one director receiving a pension contribution of 25 per cent more than other employees, with no commitment to align this.

A further two companies were marked for not committing to align the pension contributions of new directors with that of the workforce.

This article originally appeared on ftadviser.com