More than 84% of pension funds are concerned about the pay gap in listed companies, according to the Pensions and Lifetime Savings Association (PLSA).

The PLSA also said that 86% of pensions funds believe executive pay in those companies is too high.

The figures follow the announcement of corporate governance reforms by the Department for Business, Energy & Industrial Strategy.

For the first time, listed companies will have to publish pay ratios between chief executives and the average UK worker.

The package of corporate governance reforms is designed to enhance transparency of big business to shareholders, employees, and the public.

New laws will force all listed companies to reveal to pay ratio between bosses and workers.

The reforms will also include the world's first public register of listed companies where a fifth of investors have objective to executive annual pay packages.

Luke Hildyard, stewardship and corporate governance policy lead, at the Pensions and Lifetime Savings Association, said the announcement should be welcomed.

"For the average chief executive to receive 128 times the average pay of their staff is hard to justify and appears disproportionate in almost any circumstances," he said.

"We are hopeful that today's announcement is a concrete step forward that will see a more measured and transparent approach to executive pay."

The new scheme will be set up in the autumn and overseen by the Investment Association, a trade body that represents UK investment managers.

New laws will be introduced over the coming month that require around 900 listed companies to annually publish and justify the pay ratio between CEOs and their average UK worker; and all companies of significant size to publicly explain how their directors take employees' and shareholders' interests into account.

The reforms come after last year's proposals by the Prime Minister to improve transparency and accountability, giving employees a voice in boardroom.

The PLSA said it would have liked to have seen the government go even further in its efforts towards transparency.

Hildyard said: "We would like to have seen stronger requirements place on companies with regards to their CEO pay policies - requiring a supermajority (75%) rather than a simple majority (50%) means that it would be harder for companies to force through pay proposals despite serious reservations from their most engaged shareholders."

"Workplace pension schemes represent the interests of almost 20 million active members across the UK and invest trillions of pounds into the economy – they are some of the most long-term and engaged shareholders that companies have.

"It is clear that they are extremely uncomfortable with the executive pay culture that has taken hold across corporate Britain with the majority voicing concerns over the pay gap and executive pay in listed companies."

First published 31.08.2017

Lindsay.sharman@wilmingtonplc.com