Skip to content

Brought to you by

Dentons logo

UK People Reward and Mobility Hub

The latest updates in employment, benefits, pensions and immigration

open menu close menu

UK People Reward and Mobility Hub

  • Home
  • Events
    • Past events
  • Who We Are
    • Meet the team
  • How we can help

Investment Association and executives’ pensions

By Verity Cruse
November 23, 2020
  • Pensions
Share on Facebook Share on Twitter Share via email Share on LinkedIn

Investment Association (IA) has published The Investment Association Principles of Remuneration for 2021 – Impact on Pensions.

Pension-related payments should not be used as a mechanism for increasing the total remuneration of executives, so reports the IA in its recent publication, “The Investment Association Principles of Remuneration for 2021”. The context to this is the UK Corporate Governance Code which states that pension contribution rates for directors should be aligned with those available to the workforce. IA members consider this to be the rate which applies to the majority of a company’s workforce. The IA expects new executive directors or any director changing role to be appointed on this level of pension contribution. The contribution rates for incumbent executive directors should be aligned over time to the contribution rate available to the majority of the workforce.

In its accompanying letter, the IA explains that, where a remuneration committee fails to disclose a credible action plan to align the pension contributions of incumbent directors to the majority of the workforce rate by the end of 2022, it will “red top” the remuneration report if the pension contributions received by the executive director are 15% or more.

The IA has other expectations too, such as:
• payments in lieu of pension scheme participation for directors should be clearly disclosed and treated as a separate non-salary benefit;
• there should be informative disclosure identifying incremental value accruing to pension scheme participation for executives and any other superannuation arrangements they enjoy;
• changes in pension benefit entitlements or transfer values reflecting significant changes in actuarial and other relevant assumptions should be fully identified and explained; and
• where changes to pension benefit entitlements or transfers are made at the discretion of the Remuneration Committee, these should be clearly disclosed, and a justification should be provided.

This shift to a more equitable focus in the reward structure at the top of investment houses is interesting and it comes at a time when companies across all sectors are looking to their employees’ financial wellbeing. A marked difference between high earning executives with pension perks and lower paid employees seems less sustainable now in the financial world hit by COVID-19.

Share on Facebook Share on Twitter Share via email Share on LinkedIn
Subscribe and stay updated
Receive our latest blog posts by email.
Stay in Touch
Verity Cruse

About Verity Cruse

All posts

You might also like...

  • Disability
  • Discrimination
  • Pensions

Supreme Court considers "unfavourable" treatment in relation to disability discrimination

The Supreme Court has found that calculating an employee’s pension entitlement based on the employee’s part-time salary (where the employee […]

By Claire Maclean
  • GDPR
  • Immigration
  • Pensions
  • Privacy
  • Sex Discrimination

UK Employment Law Round-up – February 2018

In this issue we look at some of the key employment law developments that have been taking place over the […]

By Lauren Costello
  • Pensions
  • Pensions Regulator

Back to business as usual for the Pensions Regulator?

By Eleanor Hart

About Dentons

Dentons is the world’s largest law firm, delivering quality and value to clients around the globe. Dentons is a leader on the Acritas Global Elite Brand Index, a BTI Client Service 30 Award winner and recognized by prominent business and legal publications for its innovations in client service, including founding Nextlaw Labs and the Nextlaw Global Referral Network. Dentons’ polycentric approach and world-class talent challenge the status quo to advance client interests in the communities in which we live and work. www.dentons.com.

Dentons Largest Global Elite Law Firm

Twitter

Categories

Dentons logo

© 2021 Dentons

  • Legal notices
  • Privacy policy
  • Terms of use
  • Cookies on this site