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Business Comment

James Moore: Pensions another way to pay the fat cats


Outlook The TUC today releases the latest edition of its Pension Watch survey, an illuminating document which analyses the retirement arrangements of the directors of this country's top 100 companies.

With the relentless rise in salaries facing sharp criticism, the occupants of Britain's boardrooms have sought other ways to feather their own nests. In addition to some truly scandalous, long-term incentive schemes, pensions have increasingly been used as an alternative way of getting cash under the table and into executives' hands.

Take the closure of defined benefit schemes – which offer guaranteed pensions to members – and their replacement with defined-contribution arrangements, where the employee's pension is based on investment returns and they bear the risk.

The logical, not to mention easy, option would be to transfer everyone into the same defined-contribution scheme on the same terms, as easyJet has, in fact, done. But this, sadly, is a rarity. Most directors have their contributions plated with gold, and still more expensive metals.

Of course, easyJet has a rather noisy shareholder, who's never been shy about levelling pointed criticism of the remuneration arrangements offered to the directors he and his fellow shareholders employ.

Sir Stelios Haji-Ioannou has taken a lot of flak in the City as a result, but it does mean that the board, while it doesn't agree with him on most issues, has to look after shareholders' interests on matters like this. Perhaps there's a lesson there.