The Real Pension Problem

The Independent On Sunday leads with the story of do as we say and not as we do when it comes to bosses awarding themselves high pensions while endeavouring to cut their workers.

Twenty years ago, the average CEO of a FTSE 100 company earned 17 times the average employee's pay. Now it is more than 75 times. Now Britain's top company bosses can also look forward to pension pots that have soared by 70 per cent in less than a decade and are now at record levels. The growth in directors' pension pots has more than doubled that of the average Briton over the same period – which has gone from about £23,000 in 2003 to £30,000 today – a 30 per cent rise. Public-sector workers including nurses and teachers will have to work longer and pay more to close a "black hole" expected to widen from £3bn in 2010 to £7bn by 2015-16.

The five biggest pension pots of FTSE 100 directors are worth more than £84m combined – nearly 600 times greater than the £150,000 that the average retirement fund of five working Britons would. The sheer size of the funds set by for their retirement could give four of the five top directors annual incomes of more than £1m.come to.

Alan MacDougall, managing director Pensions Investment Research Consultants, said: "There's a basic unfairness in that most of these companies have been shutting final salary schemes or winding them down, as well as the disparity between the values inherent in direct contribution schemes that employees are being forced into, and what directors are effectively paying themselves in terms of pension provision."

Michael Johnson from the Centre for Policy Studies said executive pay had "outstripped in an unreasonable way the remuneration of the man in the street". He added. "Executive pay is hugely excessive, and pension is a component of it." A report released earlier this year by the High Pay Commission predicted that FTSE 100 chief executives will be paid 214 times more than the average wage by 2020.

Unison's general secretary, Dave Prentis, complained that two-thirds of private companies "do not pay a single penny towards their workers' pensions".

Jeroen van der Veer, former boss of Royal Dutch Shell, tops the list with a staggering £21.5m pension pot, which can pay out £1.4m a year. Former Barclays boss John Varley has a fund of more than £18m, which can yield £1.2m. Sir Frank Chapman, CEO of BG Group, has a fund of more than £16.5m, and David Brennan, CEO of AstraZeneca, a fund of £14.7m, both worth more than a million a year. Diageo's CEO Paul Walsh has a fund worth £13.4m, which could pay out more than £930,000 a year if he retired today.

Details of the hefty increases come as employees are being warned that rising inflation and stock market volatility have wiped billions off the value of their pensions. The National Association of Pension Funds warned last month that more than £120bn had disappeared from funds in only four weeks as the FTSE 100 index dropped below the 5,000 level. Prudential warned that rising inflation threatened to cut the real value of funds by 60 per cent.

TUC general secretary Brendan Barber said: "This survey highlights the real pension scandal in Britain today."