Nationwide cuts chief Joe Garner’s £292k pension in HALF…now rivals face calls to axe THEIR giant perks
- Nationwide boss Joe Garner has faced criticism earlier for earning £2.37million
- Luke Hildyard, High Pay Centre: ‘It would be churlish not to welcome this move’
- Nationwide says Garner’s pay is less than what larger rivals pay their bosses
Nationwide Building Society chief executive Joe Garner is slashing his pension perks in half in a move that will pile pressure on rival bosses.
Garner last year received 33 per cent, or £292,000, of his salary as a pension contribution. This is being halved to 16 per cent from 2021, leaving him with £141,600 by then.
The move is part of wider cuts to the Nationwide pension scheme and will mean his retirement perks are proportionate to those enjoyed by other staff, who will get an employer’s contribution of 16 per cent of salary paid into their pension.
Britain’s biggest building society has received criticism for paying executives’ millions on salaries, perks and bonuses. Now their CEO has decided to take a pension cut
Nationwide hopes reducing Garner’s handout will allay staff concerns after talks began last month about moving 5,444 members from its generous final salary scheme into a less generous ‘defined contribution’ plan.
Giant pension perks have become a focus of investor fury in the City since The Mail on Sunday revealed last year that one in ten FTSE 100 chief executives received pension contributions equivalent to 40 per cent or more of their annual salary.
In some cases, bosses were receiving in excess of £500,000 a year. Most bosses receive these sums in cash as opposed to the payments into a company pension plan offered to most workers. This is so they can avoid breaching the £1 million lifetime limit on pension saving. Garner can take his pension payout in cash or put it towards his pension pot.
Standard Chartered earlier this month agreed to halve chief executive Bill Winters’ pension payments from £474,000 to £237,000 after facing an investor revolt.
HSBC and Lloyds have also trimmed payments. At Lloyds, Antonio Horta-Osorio’s payment was cut from 46 per cent of his salary to 33 per cent earlier this year, leaving him receiving £419,000 on top of £1.3million basic pay.
He was summoned by MPs to explain why he still receives far more than the 13 per cent of salary average among Lloyds staff.
Garner faced criticism himself earlier this year for his £2.37million total pay packet, which is seen as high for a mutual organisation run for the benefit of its members. Nationwide has consistently argued that his pay is in line with the going rate for a company with 15.9million members, around 650 branches and almost 18,300 staff.
It also says that Garner’s pay is less than its bigger banking rivals pay their bosses.
Lloyds boss Antonio Horta-Osorio had his pay reduced from 46 per cent of his salary to 33 per cent earlier this year, leaving him receiving £419,000 on top of £1.3million basic pay
Over the past decade, private sector firms have increasingly looked to save money by moving staff from expensive final salary pension schemes – where payouts are determined by pay and years worked – to cheaper defined contribution schemes, where payouts depend on savings and returns on the stock market. Nationwide’s employer pension contributions will fall from around 32 per cent to 16 per cent.
This is still seen as a generous contribution as many private sector firms offer only the minimum 3 per cent allowed by law.
The building society plans to spend an estimated £60million to hand members one-off compensation payments of £11,000 to soften the blow. No final decisions will be made on the scheme’s closure until talks with staff are concluded.
Luke Hildyard, of the High Pay Centre, said: ‘It would be churlish not to welcome this move by Garner. Nonetheless, Nationwide has lavished millions on executives’ salaries, perks and bonuses – and life is far from easy for branch staff, even when paid a living wage.’
Jane Hanson, Nationwide’s ‘leader of people’, said: ‘It is important to us that we reward our colleagues with a quality pension plan, competitive salary and a wide variety of attractive benefits.
‘We are proud to have a pension scheme that is market-leading and earlier this year we actively took the decision to align the pensions contributions received by our executive directors with the rest of our workforce.’