A Sunday Times (£) survey has revealed that more than 100 of Britain’s most senior quangocrats now have pension pots worth more than £1 million. The investigation found many growing by up to £240,000 every year, with some increasing by more than the salaries they are paid.
The size of these pension pots only compound other stories about huge six-figure salaries, and other perks. One of the biggest beneficiaries is Cynthia Bower, Chief Executive of the Care Quality Commission. In 2009 her pension pot was worth £871,000 but has since grown to a staggering £1,350,000, as of March this year.
Others sitting on hefty £1 million-plus pension pots include the Health and Safety Executive Chief, Geoffrey Podger, at £1,741,000; Lynda Hamlyn of the NHS Blood and Transplant at £1,640,000 and Peter Lauener, Chief Executive of Young People’s Learning Agency whose pot is worth £1,289,000.
It is feared that many will cash in on the government’s intention to shrink quango numbers and staff with perks such as early retirement pay-offs. Tony Cooper, the former Chief Executive of the Rural Payments Agency, took early retirement last year with a pension pot of £1,295,000. In addition he received an early retirement lump-sum of £243,803.
Those leaving the soon to be abolished regional development agencies are expected to receive some of the biggest financial packages. Pam Alexander, who left her position last week as Chief Executive of the South East England Development Agency, has a pension pot worth £1,268,000 and received an undisclosed “exit package.”
Following the closing ceremony of the Olympic Games next summer, the Olympic Delivery Authority (ODA) also plans large pay-outs. Chief Executive Dennis Hone has a pension pot of £1,354,000 which will be topped up when the body is shut down.
In 2008 we revealed that more than 8,500 NHS employees ad pension pots in excess of £1million, and the situation has only become worse.
After the disappointment of the so-called “bonfire of the quangos” and irresponsible credit card spending, The Sunday Times findings will do nothing to repair quangos’ discredited reputations. Staff is often the biggest area of spending for many organisations; hidden costs such as pensions and pay-offs are considerably more than their annual salaries therefore it is important this information is publicly available.
Lord Hutton published a report this year proposing widespread reforms including higher contributions and pensions based on career average earnings rather than final salary. Ros Altman has advised the government on pensions and agrees that something must be done:
Huge sums of money will be payable and people don’t realise this…taxpayers need to understand what the costs are.
The public finances are in crisis and big pension liabilities add to these worries. Hutton’s suggestions are a good place to start, although in the long term it may be advisable to switch to a system based on defined contributions.