Top directors’ pensions now hit £2.8m

A survey of 137 directors in FTSE-100 firms found that the money could buy an employee a pension worth more than £170,000 a year.

Research group Incomes Data Services (IDS) said cash payments in lieu of pension contributions were becoming increasingly common, worth an average of £160,000 for chief executives and £141,000 for all board directors, equal to 25 per cent of salary.

Steve Tatton, editor of IDS’s Executive Compensation Review, said: “Until recently, executive directors have been cushioned from the worst effects of the deteriorating pension provision faced by most employees, however both the last and new Governments promoted tax changes aimed at reducing the benefit from ‘top hat’ schemes.

“While pension provision for board directors have remained generous, much of the workforce over the last few years have been going through a process of having the value of the payments into their scheme reduced.”

The report was published before Thursday’s strike by hundreds of thousands of teachers, lecturers and civil servants over Government plans to increase their pension contributions and extend their retirement age.