Xafinity today announced the results of its annual Xafinity Consulting Executive Retirement Benefits Survey.
 
The study, which canvassed the views of 3,000 senior HR managers and directors from a range of organisations throughout the UK, looked at the benefits gap between senior executives and other employees with regard to retirement provision.
 
The study found that accrual rates in final salary schemes of 1/45th remains exclusive to the senior executives – with nearly 40% enjoying as opposed to just 3% of other employees.
 
However, the study found that there has been a clear convergence of benefits between executives and other employees, as only 29% of those companies surveyed now offer a higher level or different type of retirement benefit to its executive directors or senior executives – down 15% from last year.
 
Perhaps even more surprising and illuminating was that over 50% of executives receive an employer’s contribution of less than 10% and over 75% receive less than 15%: a contribution level that is unlikely to produce a retirement pension that will meet the historic expectations of senior executives.
 
New to the survey this year and a relatively recent development is the increase in popularity of Self-invested Personal Pensions with 25% of employers now offering a SIPP facility to their senior executives.
 
Commenting on the results, Xafinity Consulting’s managing director; Robert Birmingham says, “it is evident from this year’s results that there is a continuing trend towards the convergence of benefits for senior executives with those of other employees."

With DC being more widely used for future service provision the true impact of this change on retirement pensions for senior executives may take several years to emerge.

"However, unless we see substantive increases in DC contribution levels we can anticipate that many senior executives will find that their retirement funds are unable to purchase pensions anywhere near the levels enjoyed by the previous generations of executive," says Birmingham.

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