Under the Labour government in 1968, the Prices and Incomes Board proposed that 3 per cent of the university salary bill be performance pay. There was to be merit money for professors and accelerated increments for lecturers with onerous teaching duties. The PIB report stated that "the balance of rewards had swung too far in favour of research". Unfortunately, the proposals proved flawed, and something of a shambles resulted.
Those lecturers who had been at the top of the scale and were awarded an extra increment found that it could not be paid beyond the top of the national scale. At a stroke, the exercise was rendered absurd.
A similar mistake was made in 1985, when a system of merit awards was introduced.
What is more, performance payments are not pensionable. To enhance pension, a staff member must be in receipt of merit payments just before retirement, as the pension scheme is a terminal-salary one. And as the proportion of the salary bill for performance-related pay is top-sliced off the global amount for salaries before the national incremental scales are calculated, it follows that as more is set aside for performance pay, the balance for standard salary scales will tend to shrink.
Over time, the salary scales will deteriorate while performance payments grow. Long-term pensions will deteriorate as scale maximums remain static in cash terms and lose real value.
Another Treasury wheeze!
H. C. S. Ferguson