BlackRock has called on MPs to scrap final salary pension schemes for UK board directors to bring retirement savings for executives in line with most workers.
The call is part of a parliamentary consultation which has seen other investment firms, including Royal London Asset Management (RLAM), criticise levels of executive remuneration.
MPs on the Business, Energy and Industrial Strategy Committee are gathering evidence on executive pay and asking if it is too high, what drives it, and what can be done to ensure high levels of pay are deserved.
In a response to the MPs’ call for comment, BlackRock’s corporate governance experts Amra Balic and Jennifer Law wrote: “Pension provisions as a percentage of salary should be in line with those received by the wider employer base.”
In its response RLAM said there was an over-reliance on pay consultants leading to higher pay for senior staff because “boards that rely heavily on advisers tend to apply benchmarking without sufficient use of discretion”.
The Institute of Directors said that boards sometimes outsourced remuneration to consultants, reducing accountability and creating unwanted outcomes.
Newton Investment Management’s chair Helena Morrissey suggested putting workers on to the boards’ remuneration committees.
“A worker representative on the remuneration committee would certainly be a big step forwards and I believe could lead to radical and positive improvement in the current problematic area of executive pay,” she said.
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