Quango chiefs grab million-pound pension pots

Those in the top management levels of public bodies, including quangos, often have non-typical remuneration packages which have been negotiated as a  one-off.

Taking a boost to your pension instead of an annual bonus is a very canny approach: not only is it tax-efficient, but even a small increase to your annual pension is equivalent to a very large increase in the value of your pension pot.

A survey of national quangos for The Sunday Times revealed more than 100 civil servants to have amassed pensions worth more than £1m – that’s more than £100m of payouts for only a small handful of workers.

The £3bn annual ‘black hole’ in public sector pensions is fast becoming a major issue (see my previous briefing on Lord Hutton’s pension review), and this figure has been forecast to rise to £7bn by 2015/16.

Full text of this article is on the Sunday Times website here, or read on.

Quango chiefs grab £1m pension pots

A survey of the biggest quangos reveals that these golden pension pots are swelling by up to £240,000 every year

Jon Ungoed-Thomas and Cal Flyn
The Sunday Times, 4 September 2011

More than 100 of Britain’s most senior quangocrats have amassed pension pots worth more than £1m — and can then get top-ups worth hundreds of thousands if they opt for early retirement.

A survey of the biggest quangos reveals that these golden pension pots are swelling by up to £240,000 every year. Some officials are getting more money ploughed into their pensions than they are paid in salary.

One of the biggest winners is Cynthia Bower, head of the Care Quality Commission, criticised this year for failing to act on a whistleblower’s concerns over a care home in Bristol where patients were appallingly abused.

Bower, a former strategic health authority boss, had a pension pot worth £871,000 in March 2009. In just two years, it has risen to £1,350,000.

Other quangocrats sitting on £1m pension pots include Geoffrey Podger, chief executive of the Health and Safety Executive, who has a pot of £1,741,000; Lynda Hamlyn, chief executive of NHS Blood and Transplant, who has a pot worth £1,640,000; and Peter Lauener, chief executive of the Young People’s Learning Agency, who has a pot of £1,289,00.

David Cameron pledged to curb the quango state before he took office.

The coalition government announced plans last year to abolish more than 190, while hundreds of others would be reformed or cut back.

The government, however, faces huge costs in reducing the numbers of highly paid bosses, because many are entitled to additional early retirement payments.

Tony Cooper, former chief executive at the Rural Payments Agency, took early retirement last year after building up a pension pot of £1,295,000.

His pot was boosted with a payment of £243,803 as “early retirement benefits”. Long-serving officials can opt for early retirement once they are past the age of 50.

Trevor Beattie, director of strategy at the Homes and Communities Agency, who left the quango in November last year, had a pension pot worth £1,240,000 in March 2010.

The agency paid an extra £346,691 to help fund his early retirement. Among the quangos facing the axe are the regional development agencies.

Pam Alexander, the chief executive of the South East England Development Agency, has a pension pot of £1,268,000. She left last month but her exit package has not been disclosed.

Regional development agencies have paid £23.4m to 800 staff made redundant, it emerged this month. It is estimated that the total payouts could be more than £80m by the time the agencies are wound up next year, with some of the biggest payments earmarked for pension top-ups for the most senior staff.

The Olympic Delivery Authority (ODA) will also face large payouts when it winds up after the games. Dennis Hone, the ODA chief executive has a pension pot of £1,354,000. A spokesman confirmed that his pot is due to be topped up with extra payments when the authority is shut down.

Most public sector pensions are a fraction of those enjoyed by the top officials, with the majority of former public sector pensioners on less than £5,000 a year.

Ros Altmann, who has advised the government on pensions, said a cap should be considered on the size of publicly funded pensions for senior officials.

“Everyone deserves a good pension, but taxpayers need to understand what the costs are,” she said. “Huge sums of money will be payable and people don’t realise this.”

Mark Serwotka, of the Public and Commercial Services union, said: “The real divide in pensions is not between the public and private sectors but between most people — who have to scrimp and save — and the few at the top, in both the public and private sectors, who are looked after whatever happens.”

Lord Hutton, the former Labour minister, published a report this year proposing reforms to public sector pensions, including higher contributions and pensions based on career average earnings, rather than final salary.

The Care Quality Commission said Bower’s NHS pension was calculated according to length of service and final salary.

The Homes and Communities Agency said the sum paid to Beattie would save money in the long run because he had not been replaced.

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