Executive Benefit Survey 2004

Executive directors prefer final salary pensions to cash.

During May 2004 we conducted our annual survey of pension benefits provided to executive directors of companies within the FTSE 350 and below are some highlights:

  • Given the choice of a final salary pension, a cash alternative, or a money purchase pension, nine out of ten company directors chose final salary benefits. Many in the pensions industry felt that executives would take a cash alternative where the additional tax charge (described above) will arise, but our survey suggests that directors will be reluctant to do so.

  • One in three companies surveyed uses Funded Unapproved Retirement Benefit Schemes (FURBS) or Unfunded Unapproved Retirement Benefit Schemes (UURBS) to provide pension earnings above the earnings cap (currently £102,000), and most of the remainder provide some other compensation on earnings above the cap. These companies will have the opportunity to simplify their arrangements in the future, as from A-day there will be no earnings cap and FURBS/UURBS will become less tax efficient.

  • A clear division has emerged in pension provision for directors; those directors receiving first class pensions from defined benefit (DB) schemes worth over 40% of salary, and the rest with defined contribution (DC) schemes worth less than 20% of salary.

Download the PDF version of the 2004 Executive benefits survey