'Employers Want to Have Cake and Eat It'

Article excerpt

A new row broke out yesterday over the Greenbury Committee's proposals on disclosure of directors' pensions, when employers were accused of trying to "have their cake and eat it".

Some employers have been strongly critical of the Greenbury proposals because they will show that pension benefits resulting from salary increases can be worth several times annual earnings.

They fear that once this hitherto secret benefit is disclosed in annual reports there will be heightened public concern about rewards for "fat cats".

But Paul Thornton, chairman of the Pensions Board of the Institute and Faculty of Actuaries, said yesterday it was perfectly possible for companies to avoid sharp increases in pension benefits, even with the original Greenbury method.

He was introducing a consultative report on the subject commissioned from the actuarial bodies by the Stock Exchange and the Department of Trade and Industry.

Many employers have argued for a different method of disclosure which averages pension benefits over the years and shows less dramatic increases in benefits than Greenbury.

But Mr Thornton said that if companies based directors' pensions on the last three years of service rather than the final year it would remove the sharp peaks disclosed using the Greenbury method - and the change would also bring directors pension conditions more into line with those for employees. …