Cream for the rich, cake for the rest

While the media assault on the RMT union continues– even though Tube maintenance workers have suspended their strike– news comes of how well some people are doing when it comes to pensions. Tube and other workers affected by bankrupt companies are rightly concerned whether they will actually get a pension but top directors are sitting pretty. Directors of the UK's top companies have amassed pensions worth nearly £1 billion, according to the annual TUC PensionsWatch survey published today.

The TUC's analysis shows that the average executive can retire at 60 on a final salary pension worth over £3 million, up £300,000 in a year. This is enough to provide a pension of £193,000 a year - more than 25 times the average occupational pension of £7,500 a year and an increase of 15% on the findings of last year's survey. Looking just at the director with the biggest pension in each company, their average pension is worth £5.3 million, up £400,000 in a year. This is enough to pay out a pension of £320,000 - over 42 times more than most staff pensions - and an increase of 10% since last year. The biggest final salary pension pot in the survey tops £21 million - £2 million more than the biggest last year - and would pay the director over £1 million a year. Five directors have a pension pot worth over £12 million.

Key findings show that:

• the proportion of directors with final salary pensions is 79%
• 59% of companies have closed final salary schemes to new staff in recent years
• 38 out of the 49 companies where information is available allow directors to retire on a full pension at 60
• directors' pensions grow twice as fast as the most common rate for employees
• employer contributions to directors' schemes was, on average, the equivalent of around 20% cent of salary, compared to the average of just 5.8% for all employees
• the highest annual employer contribution to a director's defined contribution pension was £988,732.

TUC general secretary Brendan Barber rightly says: “Top executive pay has already created a new group of the super-rich who float free from the rest of society. This report shows that this does not stop with their retirement.” What is he and other union leaders going to do about it? Where is the support for the RMT’s fight for pensions and job security following the collapse of Metronet? All the signs are that the TUC leaders will continue to prostrate themselves before a government that has created the conditions for the super-rich in Britain to flourish like never before.

The gap between the rich and poor has reached levels not seen for more than 40 years. Government statistics show that the richest 10% of the population control more than half the wealth of the country, with the top 1% controlling no less than 21%. In the City, fat-cat pay awards mean that top executives earn 100 times more than their employees. Meanwhile, private equity and hedge funds pay "less tax than a cleaner", according to Nicholas Ferguson, chairman of private-equity and fund management group SVG Capital. Soaring house prices have left hundreds of thousands of households unable to afford decent housing while properties in London regularly change hands for more than a million pounds. The level of social mobility in the UK is among the lowest of any developed nation. For New Labour, the rich are simply reaping the just rewards for enterprise, initiative and investment in the market economy. As for the rest, in another century the slogan might be “Let them eat cake”.

Paul Feldman
AWTW communications editor