Pension deal puts top earner's pay at £24m

The highest-paid executive in a British public company received nearly £24.5m last year, rather than the usually quoted £17m. When the employer's pension contribution is taken into account, Peter Wood of the Royal Bank of Scotland, who set up the money-spinning Direct Line Insurance, received an extra £7m, representing nearly 30 per cent of his salary. Most employers typicallycontribute between 7 and 8 per cent of basic rates to pension funds, according to the National Association of Pension Funds.

In its latest study of directors' remuneration, the union-funded Labour Research Department points out that pensions are rarely taken into account when pay is reported.

The organisation found that of 40 directors identified in 38 quoted companies, virtually all of them enjoyed double-figure contributions, with 21 receiving more than 20 per cent of their salary. The LRD points out that businesses are not obliged to disclose such information.

At the privatised water company Severn Trent, for example, management contributes 8.8 per cent of earnings to employees' pensions, compared with 24.6 per cent and 27.8 per cent for the company chairman and highest-paid director.

The survey is published in the wake of the furore on Tuesday caused by Sir Iain Vallance, BT chairman, who told the House of Commons employment committee that he would find it "relaxing" to be a junior hospital doctor. In fact, Sir Iain, who was referring to his 70-hour week, received £94,000 in pension contributions, taking his remuneration to £757,000 a year. That compares with junior doctors' pay, which can be as low as £12,500.

The second-highest pension contribution identified by LRD was enjoyed by Pat Rich, who retired last year as chairman of BOC, the industrial gases group. The company's pension contribution outstripped his salary. For his last six months in the job he received £387,000 in pay but £1,039,000 towards his retirement.

Last year, Alexander Dyer took over as highest-paid director at BOC on £620,000, but his pension received £472,000. Eighteen other executives received six-figure pension contributions last year, including a Glaxo director, Sir Paul Girolami, who got £696,000.

towards his retirement.