Who benefits from bonus?

Aug 16 2005 By Helen Logan Evening Gazette

They wonder why they keep getting branded fat cats, but the greedy and unfair actions of bosses at some large companies beggars belief.

Apparently, a growing number of major companies are freezing salaries for many employees and substituting bonus payments.

This has been labelled in some quarters as the death knell for the annual pay rise.

The monetary gain for firms is that performance-related bonuses do not count towards final salary pensions.

The trend started in the financial services sector, but is now spreading as firms battle spiralling pension bills.

Bonuses have been a mainstay of the boardroom, with some company bosses commanding six or seven-figure sums.

The argument has been that this level of reward has been needed for these companies to attract and keep the right calibre of leader.

And these top-flight annual bonuses rarely - if ever - have been an alternative to an annual wage rise, which counts towards pension schemes.

So while it appears the fat cats will continue to rake in the riches, staff at the other end of the scale are being frozen out when it comes to topping up their pensions.

As it is, people are struggling to make sure there is enough in their pension pots for a comfortable retirement.

Thousands of workers have lost their savings in collapsed company pension schemes.

Final salary pensions in the private sector for new employees are rapidly becoming a thing of the past.

And many younger workers find themselves unable to save enough, early enough in to a pension scheme as they contend with students loans and surging housing costs.

Once again is it a case of "do what I say rather than do what I do".