With retirement funds full, salaries expand

Source: Alamy

For the pot or the pocket? Many universities are reducing pension contributions and increasing salary payments for their heads

The average remuneration paid to the vice-chancellor of a Russell Group university rose by £10,175 to £7,000 in 2011-12 - a 4.1 per cent increase, according to a Times Higher Education analysis of 20 of the group’s 24 members.

Figures from the available annual financial statements show that 13 Russell Group vice-chancellors received a basic pay rise in the past academic year, three had their pay frozen and four took a pay cut.

The highest salary rise was awarded to the University of Warwick’s Nigel Thrift, whose remuneration soared by £50,000 to £288,000 in 2011-12 - a 21 per cent increase.

At the University of Bristol, Eric Thomas, who took over as president of Universities UK in 2011, received a pay boost of £28,000 to £282,000 in 2011-12 - an 11 per rise.

That compares with the flat £150 national pay increase awarded to university staff in 2011-12.

Other increases include a £21,000 pay hike for Christopher Higgins, vice-chancellor of Durham University, whose basic pay rose from £211,000 to £232,000.

However, several vice-chancellors received less in employer pension contributions in 2011-12 as cuts to pension tax relief took effect.

Under the changes, the total amount that can be paid into a pension while still claiming tax relief, known as the “lifetime allowance”, fell from £1.8 million to £1.5 million in April 2012, while the “annual allowance” was reduced from £250,000 to £50,000 in 2011.

Several university remuneration committees altered their vice-chancellors’ pay packages - increasing salaries and reducing pension contributions - which would have helped vice-chancellors avoid breaching caps and paying extra tax.

Brian Cantor, vice-chancellor of the University of York, left the sector’s main pension scheme in December 2011, but received a “payment in lieu of pension contributions” worth £19,950, after his employers’ pension contributions fell from £48,499 to £21,345 in 2011-12.

That meant that his salary rose by about £28,000 to £251,900 in 2011-12, but his total pay and pension deal remained almost steady at a total of £3,237 - up by just 0.3 per cent on 2010-11.

At the University of Bath, a non-aligned institution, the pay package for its vice-chancellor, Dame Glynis Breakwell, was also restructured.

Her salary rose by £72,000 in 2011-12 - up from £284,000 to £356,000 - while the pension contributions she received plummeted from £65,000 in 2010-11 to just £11,000 in 2011-12.

Overall, average total salary and pension payments for Russell Group vice-chancellors stood at £311,000 in 2011-12 - a 1.1 per cent increase on the £308,000 paid in 2010-11 across the 20 universities whose accounts have been published.

It’s not for you, taxman

Asked about the shifting balance between pay and pensions, Michael Harrison, a principal in the higher education pensions group at the consultant Mercer, said: “This isn’t about tax avoidance - it’s about providing benefits that won’t get taxed out of existence. If a university can provide £100 worth of benefits that will be taxed at 45 per cent, surely that’s more sensible than providing £100 worth of benefits with most of it going to the taxman.”

Ian Hartnell, head of the employee benefits consultancy branch of accountant Grant Thornton, said: “I would suggest that several vice-chancellors were close to the lifetime allowance, so it is a total waste of money if resources are put into their pensions.

“Lots of vice-chancellors may not be able to pay into the package they had, so some jiggery-pokery needs to be done.”

However, Sally Hunt, general secretary of the University and College Union, said: “While staff have seen their real-terms pay fall for three successive years, many vice-chancellors and principals have had their snouts firmly in the trough, including receipt of huge pay awards to get round new pension rules.”

Warwick said that Professor Thrift’s emoluments had risen by £42,000 once a £8,000 fall in pension payments was considered.

That followed a two-year pay freeze and a benchmarking exercise to “bring his remuneration into line with the average for Russell Group heads of institutions”, a spokesman added.

Deserved increases

A Bristol spokesman said that Professor Thomas had also had a two-year pay freeze before the most recent increase.

His employer pension contributions fell from £60,000 a year to £38,000, resulting in only a £5,000 increase in emoluments since 2008-09, the spokesman added.

Durham also noted a two-year pay freeze for Professor Higgins before last year’s increase. Robert Gillespie, chairman of the university’s council, said in light of the vice-chancellor’s achievements - including Durham gaining Russell Group membership - it was decided to “align his remuneration more closely with that paid by other leading universities in the UK”.

Bath said that a “restructuring” of Dame Glynis’ emoluments had led to a 5 per cent increase, which its remuneration committee felt was merited by the “outstanding success of the university over that period”.

A York spokesman said Professor Cantor’s total emoluments “increased by only 0.3 per cent in 2011-12”, which “could [not] be regarded as an unreasonable pay rise”.

jack.grove@tsleducation.com.