Fund managers get tough on board pensions

The National Association of Pension Funds has clashed with business leaders by demanding tough new rules on disclosure of directors' pension benefits. The move coincided with warnings by Sir Ronald Hampel - chairman of ICI and of the successor to the Cadbury Committee on corporate governance - that imposing strict codes on companies would not correct behaviour or stop fraud.

Sir Ronald also said he believes Sir Richard Greenbury's committee on executive pay, which last year recommended highly detailed disclosure of remuneration, "suffered from the fact that for political reasons" he was trapped into very rapid production of the report. He said that, given time to review its findings, there "may have been some amendment".

Reopening the debate on corporate governance and top pay, Sir Ronald said nothing should be done to hinder UK competitiveness in the global marketplace or restrict growth. His personal view was that principles rather than strict rules should be the guiding force in corporate governance. "What I am concerned about is the perception that codification is the solution to all problems. I have a problem with rules that are so rigid because this is not an area which lends itself to that," he said.

Sir Ronald said he was not determined that his committeeshould come up with "anything earth-shattering" and that he would not suggest change unless it was justified. But he stressed that the comments he was making did not reflect the views of the committee, which has met only once.

He said: "I need some convincing that the basic system which has built up in this country of a boardroom balance of inside and outside directors can be much improved - provided the outside directors have relevant experience."

His comments came as NAPF called for full disclosure of the capital cost to a company of providing a pension and has sent its opinion to the Institute and Faculty of Actuaries, which is preparing a report for the Stock Exchange. The result could be a change in listing rules. The CBI has argued for an alternative method which would disclose directors' expected pension income at retirement and which would show much smaller amounts.