FTSE 100 companies are adapting to the removal of pensions tax relief for high earners by offering cash payments instead of pension contributions, according to research conducted by Lane Clark and Peacock (LCP).
The LCP FTSE 100 Executive Pensions Survey showed that there had been a £42,000 fall in the average annual pension cost for executives. However, the average employer pension costs for executives is a generous £225,000 a year.
Two in three executives have pensions in tax-registered pension schemes facing additional tax charges. Organisations are offering their executives different options following the new tax charges.
The study also showed that executives are giving up defined benefit (DB) pensions and defined contribution (DC) pensions for a cash alternative, providing the flexibility to make pensions contributions within the new limits.
Almost half (45%) of UK-based executives with DB pensions receive part or all of them outside a tax-registered pension scheme.
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