Hewitt targets fat cat pensions

TRADE Secretary Patricia Hewitt is putting forward proposals to help curb excessive directors' pensions. Top executives have been slammed for tucking away large benefits while attacking final-salary schemes for ordinary employees.

The new rules are likely to reveal that many bosses have accumulated retirement nest-eggs that are worth millions. Under Hewitt's proposals, directors would have to disclose the full 'transfer value' of their final-salary pension, or the size of the retirement pot they could take to another employer.

The proposals, contained in a consultation document on board pay, aim to make directors' pensions more transparent and to encourage greater scrutiny by shareholders. Hewitt plans to introduce legislation this year forcing companies to allow shareholders a vote on their executive pay and pensions policy. The consultation period ends this week.

Lavish pensions doled out to directors have come under the spotlight as many schemes fell into deficits following the introduction of controversial new FRS17 accounting rules, which make shortfalls more immediately visible.

The total funding gap in leading UK companies is likely to reach £10bn. Those with a deficit include BAe Systems, which disclosed a funding gap of £776m. Marconi admitted to a 'past service' deficit of £137m. It will make extra contributions of £16m a year for 12 years but said its scheme is fully funded under FRS17.

Engineer GKN said FRS17 would have reduced shareholders' funds by £169m at the end of 2001. The group is making additional contributions of £10m a year.

Builders merchant Travis Perkins is reviewing its final salary pension scheme, which has a £32m deficit. It is topping up the scheme for present members.