UK - Companies must consult remuneration committees before they even consider offering executives other benefits in place of pensions after tax simplification, Watson Wyatt warns.
Partner Sue Bartlett believes an “alarming number” of firms are not prepared for the £1.4m lifetime savings limit and the alternatives – such as increased share options – they can offer executives.
Chancellor Gordon Brown is expected to confirm the £1.4m savings cap – which is due to come into force in April 2005 – and tax simplification in his March 17 Budget.
However, Bartlett said companies had yet to prepare for the changes or consult their remuneration committees as to what alternatives are acceptable.
She said: “UK PLC needs to wake up as there are alarming numbers that have not involved their remuneration committees. Firms can’t do much about the issue until they’ve at least got a steer from their remuneration committees as to what alternatives are acceptable.
“There’s not much profit in a company arranging things if it finds out later that the remuneration committee is not in favour of it. It really ought to involve them at all stages.
“There is a huge opportunity for companies to plan and organise themselves efficiently, effectively and use the pension changes as a catalyst to change other things in their reward packages, and make them more tax-efficient or even more shareholder-friendly.”
This week's top stories included Cardano announcing plans to acquire Now Pensions from a Dutch pension fund later this year.
Royal Bank of Scotland (RBS) faces a £102m impact on liabilities as a result of equalising guaranteed minimum pensions (GMPs), according to its annual results.
Malcolm Mclean says getting the channels of communication right and engaging more openly is a good starting point