Company directors are the one class of British worker to remain relatively unscathed by the decline in final salary pension provision, according to research by the pensions adviser, Origen.
Despite a collapse in the number of final salary pension schemes open to new members over the past five years, with some employers even closing the schemes for existing workers, just 5 per cent fewer company directors have access to a final salary plan today than in 2001, Origen said. It added that 45 per cent of senior executives at larger companies remained members of a final salary pension scheme, where employers guarantee a set level of pension in old age. However, two-thirds of these schemes have been closed to new members.
Instead, most employers have switched to money purchase pension plans, where staff have to accept the risk that their pensions will be hit by disappointing stock market returns.
The average combined contribution of employers and employees to money purchase plans is now 11.7 per cent, Origen said, compared to 13.5 per cent in final salary schemes.Reuse content