Transport Scotland Annual Report and Accounts 2010/11
REMUNERATION REPORT
Remuneration Policy
The remuneration of senior civil servants is set in accordance with the rules set out in chapter 7.1, Annex A of the Civil Service Management Code and in conjunction with independent advice from the Senior Salaries Review Body (SSRB). In reaching its recommendations, the SSRB is to have regard to the following considerations:
- the need to recruit, retain and motivate suitably able and qualified people to exercise their different responsibilities;
- regional/local variations in labour markets and their effects on the recruitment and retention of staff;
- Government policies for improving the public services including the requirement on departments to meet the output targets for the delivery of departmental services;
- the funds available to departments as set out in the Government's departmental expenditure limits; and
- the Government's inflation target.
Performance based pay awards are based on an assessment of performance against objectives agreed between the individual and line manager at the start of the reporting year. Performance will also have an effect on any bonus element awarded.
Further information about the work of the SSRB can be found at: www.ome.uk.com/Senior_Salaries_Review_Body
Service Contracts
Civil service appointments are made in accordance with the Civil Service Commission's Recruitment Principles, which requires appointment to be made on merit on the basis of fair and open competition but also includes the circumstances when appointments may otherwise be made.
Unless otherwise stated below, the officials covered by this report hold appointments which are open-ended until they reach the normal retiring age. The retirement age for the Senior Civil Service rose from 60 to 65 from 1 October, 2006 in line with the implementation of the Employment Equality (Age) Regulations 2006. However, once an individual's pension becomes payable, from age 60, that employee can choose to leave work and draw his or her pension at any time, subject only to compliance with the basic notice of leave requirements.
The rules for termination are set out in chapter 11 of the Civil Service Management Code. Early termination, other than for misconduct, would result in the individual receiving compensation as set out in the Civil Service Compensation Scheme. Further information about the work of the Civil Service Commissioners can be found at http://www.civilservicecommissioners.org
From August 2009 to 31 March 2011, Sharon Fairweather was seconded from Deloitte to fill the position of Director of Finance. Following an open competition, she was appointed to the post on a permanent basis from 1 April 2011.
During 2010, as part of the wider Scottish Government Shaping Up review, the Scottish Government Transport Directorate and Transport Scotland were brought together into a single transport agency covering all of the Scottish Government's transport responsibilities. Transport Scotland is now responsible for all aspects of Scottish Government transport policy and delivery covering road, rail, water and air. As a consequence, the Director of Aviation, Maritime, Freight and Canals and the Director of Transport Policy are now part of the Transport Scotland Board and are included within this report.
During the year from 1 April 2010 to 31 December 2010 Transport Scotland had two non-executive directors (Iain Docherty and Jacqueline Redmond) serving on the Board. At the end of December both had served for the maximum term allowable and therefore left the organisation. Through discussions with the Cabinet Secretary for Finance and Sustainable Growth it was decided not to retain the previous Board structure. However, new external members (Alex Smith and Dorothy Fenwick) were appointed to the Audit and Risk Committee to ensure the organisation continued to benefit from independent oversight and challenge.
Remuneration Group
For senior civil servants, Transport Scotland's remuneration committee is the Scottish Government's Remuneration Group. This Remuneration Group has six members, two of whom are non-executive directors. Their remit is to consider:
- annual pay proposals for chief executives and board members and make recommendations to Ministers;
- annual guidelines for flat rate increases for chief executives and board members and consider the Public Sector Pay policies which will apply for the annual pay round and make recommendations to Ministers; and
- pay remits which look at pay proposals for public bodies in Scotland.
The Remuneration Group will, as a minimum, report annually to the Strategic Board.
The following section of the Remuneration Report pertaining to salaries and pensions is subject to audit.
Salary
Salary and allowances covers both pensionable and non-pensionable amounts and includes: gross salaries; overtime; recruitment and retention allowances; private-office allowances or other allowances to the extent that they are subject to UK taxation. It does not include employers' pension contributions or amounts which are a reimbursement of expenses directly incurred in the performance of an individual's duties or employers' national insurance.
Where a director has joined or left Transport Scotland during the year, their salary reflects only that which they received whilst a member of the Board or senior management team. Where an individual has been a member of the Board for only part of the year but they have been employed by the Agency throughout the year, their annual salary has been reported on a "days served" basis as well as the full year equivalent salary.
Any amounts payable on early termination of a contract will be in accordance with the individual's circumstances.
Benefits in kind
The monetary value of benefits in kind covers any benefits provided by the employer and treated by HM Revenue and Customs as a taxable emolument.
Bonuses
Bonuses are based on performance levels attained and are made as part of the appraisal process. They relate to performance in the previous year, therefore, bonuses paid in 2010-11 are based on 2009-10 performance and bonuses paid in 2009-10 are based on 2008-09 performance.
Fees
Non-executive directors were entitled to receive fees for regular attendance at Board and Audit Committee meetings. Non-executive members expenses incurred in attending these meetings are also reimbursed.
The fees which the non-executive directors of Transport Scotland were entitled to for 2010-11 are as follows:
| £'000 | |
|---|---|
| Jacqueline Redmond | 4.1 |
| Iain Docherty | 4.1 |
The fees which the external members of the Audit and Risk Committee are entitled to for 2010-11 are as follows:
| Alex Smith | £232 daily rate |
| Dorothy Fenwick | £232 daily rate |
| Eileen Marshall | £232 daily rate |
This is in line with core Scottish Government remuneration of external members
Executive Director Salary Information
The salary and the value of any taxable benefits in kind of the Executive Directors were as follows:
| 2010/11 | 2010/11 | 2010/11 | 2009/10 | 2009/10 | 2009/10 | |
|---|---|---|---|---|---|---|
| Salary | Benefits in Kind (To nearest £100) | Bonus Payments £000 | Salary | Benefits in Kind (To nearest £100) | Bonus Payments £000 | |
| Bands of £5,000 | £ | Bands of £5,000 | £ | |||
| Chief Executive | ||||||
| David Middleton | 100 - 105 | Nil | Nil | 100 - 105 | Nil | Nil |
| Directors | ||||||
| Jim Barton (3) | 65 - 70 | Nil | 0 - 5 | 65 - 70 | Nil | 5 - 10 |
| Frances Duffy | 65 - 70 | Nil | Nil | 65 - 70 | Nil | 5 - 10 |
| Ainslie McLaughlin | 70 - 75 | Nil | 0 – 5 | 70 - 75 | Nil | 5 - 10 |
| Bill Reeve (2) | 65 - 70 | Nil | 0 – 5 | 100 - 105 | Nil | 0 - 5 |
| Richard Scott | 65 - 70 | Nil | Nil | 60 - 65 | Nil | Nil |
| Alastair Wilson | 65 - 70 | Nil | 0 – 5 | 65 - 70 | Nil | 5 - 10 |
| Donald Carmichael | 65 - 70 | Nil | Nil | 65 - 70 | Nil | 0 - 5 |
(1) Sharon Fairweather joined Transport Scotland as Finance Director on secondment from Deloitte on 1 August 2009. The cost paid to Deloitte excluding irrecoverable VAT for the period 1 April 2010 to 31 March 2011 was £150,000.
(2) Bill Reeve served as an Executive Member of the Board until November 2010. The figure quoted is for the period 1 April 2010 until 30 November 2010. The full year equivalent banding is £100k - £105k.
(3) Jim Barton left under Approved Early Retirement terms in March 2011. The capitalised cost of the package he received was £65k-£70k
Pensions
Accrued pension represents the director's total future entitlement to benefits payable from the Civil Service pension schemes based on reckonable service at 31 March 2011. The accrued pension includes service previous to becoming Board members and/or service in other departments.
The cash equivalent transfer value (CETV) is the actuarially assessed capitalised value of the pension scheme benefits accrued by a member at a particular point in time. The benefits valued are the member's accrued benefits and any contingent spouse's pension payable from the scheme. A CETV payment is made by a pension scheme or arrangement to secure pension benefits in another pension scheme or arrangement when the member leaves the scheme and chooses to transfer the benefits accrued in their former scheme. The pension figures shown relate to the benefits that the individual has accrued as a consequence of their total membership of the pension scheme, not just their service in a senior capacity to which disclosure applies.
The CETV figures and the other pension details, include the value of any pension benefit in another scheme or arrangement which the individual has transferred to the Civil Service pension arrangements and for which the Civil Service Vote has received a transfer payment commensurate to the additional pension liabilities being assumed. They also include any additional pension benefit accrued to the member as a result of their purchasing additional years of pension service in the scheme at their own cost. CETV's are calculated within the guidelines and framework prescribed by the Institute and Faculty of Actuaries.
The real increase in CETV quoted in the table below represents the real increase in accrued pension after taking account of inflation, contributions paid by the employee (including the value of any benefits transferred from another pension scheme or arrangement) and uses common market valuation factors for the start and end of period.
The Chief Executive and all Directors, except Bill Reeve and Sharon Fairweather, are members of the Principal Civil Service Pension Scheme (PCSPS) which provides benefits on a final salary basis at the normal retirement age. Transport Scotland's contributions to the scheme in respect of the Board amounted to £123,741 for the year to 31 March 2011. Bill Reeve is a member of the Railways Pension Scheme and Transport Scotland's contributions to that scheme were £36,812 for the year to 31 March 2011. Transport Scotland did not make any separate contribution in respect of pension for Sharon Fairweather during the year. The non-executive directors do not participate in the Civil Service pension scheme.
Further details on the different schemes available to employees can be found in note 3 to the accounts.
The pension entitlements of the Executive Directors of Transport Scotland are shown in the following table:
| Lump Sum at age 60 as at 31 March 2011 | Real Increase in Lump Sum at age 60 | Accrued Pension at age 60 as at 31 March 2011 | Real Increase in Pension at age 60 | CETV as at 31 March 2011 | CETV as at 31 March 2010 | Real Increase in CETV in 2010/11 | |
|---|---|---|---|---|---|---|---|
| £000 | £000 | £000 | £000 | £000 | £000 | £000 | |
| David Middleton | 130 - 135 | 0 - 2.5 | 40 - 45 | 0 - 2.5 | 855 | 786 | 0 |
| Jim Barton | 85 - 90 | 0 | 25 - 30 | 0 | 621 | 579 | 0 |
| Frances Duffy | 65 - 70 | 0 -2.5 | 20 - 25 | 0 - 2.5 | 428 | 394 | 2 |
| Alastair Wilson | 35 - 40 | 0 | 20 - 25 | 0 - 2.5 | 323 | 293 | 2 |
| Donald Carmichael | 65 - 70 | 0 - 2.5 | 20 - 25 | 0 - 2.5 | 413 | 380 | 2 |
| Ainslie McLaughlin | 80 - 85 | 0 - 2.5 | 25 - 30 | 0 - 2.5 | 564 | 523 | 0 |
| Bill Reeve | 35 to 40 | 0 - 2.5 | 35 - 40 | 0 to 2.5 | 498 | 480 | *n/a |
| Richard Scott | 25 - 30 | 0 -2.5 | 5 - 10 | 0 - 2.5 | 198 | 181 | 12 |
Calculated on age 60 where pension entitlement due at that age or current age if over 60
* Information from the Railways Pension Scheme was not provided in this format
*The actuarial factors used to calculate CETVs were changed in 2010-11. The CETVs at 31/3/10 and 31/3/11 have both been calculated using the new factors, for consistency. The CETV at 31/3/10 therefore differs from the corresponding figure in last year's report which was calculated using the previous factors.
The above pension data was supplied to Transport Scotland by the Department of Work & Pensions (DWP) for all of the directors with the exception of Bill Reeve for whom information was supplied by the Railway Industry Pension Scheme.
Further details about the Civil Service pension arrangements can be found at the website www.civilservice-pensions.gov.uk
David Middleton
Chief Executive
14 September 2011