UK Insurance & Finance Bonuses Well Below Pre-Recession Levels: Report

UK bonus payments rose in the past year and are now just 0.1 percent below their peak before the financial crisis in 2008, according to new data from the statistics office.

Surprisingly, the increase wasn’t driven by banking, which has been subject to almost non-stop attention since the financial crisis over the level of payouts. According to the Office for National Statistics, total UK bonus payments in the year through March amounted to 42.4 billion pounds [$65.4 billion], up 2.7 percent.

Bonuses in the finance and insurance industry dropped 9.6 percent in the same period and remain well below their pre-downturn levels.

The drop in banking bonuses may partly reflect changes in pay structures, as institutions boost base salaries to avoid regulatory limits on bonuses and tougher claw-back rules. London’s bankers have seen their bonuses squeezed after European Union lawmakers capped variable pay at twice salaries, a move intended to end a gambling culture blamed for contributing to the financial crash.

The ONS data, not adjusted for seasonality or inflation, showed financial services and insurance companies cut bonus payments to 13.6 billion pounds [$21 billion] in the year through March from 15 billion pounds [$23.2 billion] a year earlier. As a percentage of overall pay, bonuses in the industry dropped to 20 percent from 25 percent, the lowest since 2003.

Wednesday’s report showed that the average bonus per finance employee was 13,100 pounds [$20,219], a 800-pound drop compared with a year earlier. That’s still almost nine times higher than the U.K. average.

The average also masks large differences between positions and companies, with front-office roles getting bigger payouts than administrative back-office jobs. According to a survey published in May by salary benchmarking website, Goldman Sachs Group Inc. bankers got the biggest bonuses in London this year with an average payout of 194,000 pounds ($291,000). ING Groep NV and Societe Generale SA ranked last, paying 91,000 pounds.

The decrease in the average finance industry payout reported by the ONS is also due to by a shift in the timing of the so-called bonus season, the statistics office said. Some employers deferred payments from the traditional December-March period to April because of a change in tax rates in 2013, meaning the 2014 fiscal year effectively had two bonus periods.

–With assistance from Stephen Morris in London.