One-off payouts hit £125K

February 23, 2007

Large pension contributions to university chiefs, either as an annual payment or a "one-off", look to be on the rise, according to the latest Times Higher survey of vice-chancellors’ pay.

Michael Sterling at Birmingham University received a pension of £126,000 in 2005-06 up from £88,000 in 2004-05. Professor Sterling’s increase was described as "succession planning" by the university. Michael Wright, who retired as vice-chancellor of Aston University in November, received a £125,000 termination payment.

An apparent return of bumper pension payouts follows strongly worded guidance issued by the Higher Education Funding Council for England in 2003. This aimed to stamp out the practice of inflating vice-chancellors’ remuneration packages prior to their retirement.

Hefce said this week, when asked whether it was aware of or concerned about the level of pension payments in 2005-06, it was powerless to control or rein in vice-chancellor pay packets or pension payments.

A spokesperson said: "When we monitor the financial circumstances of institutions, we are interested in financial sustainability and take materiality into account in assessing whether funds have been used for the purposes intended. We place reliance on the independent external auditors… Nonetheless we are aware of the developments in v-cs’ pay from our own analysis."

It added that universities, "like all organisations, should not inflate salaries prior to retirement. That is why [they] have remuneration committees…", who with the governing bodies, "should be ensuring this does not occur. Hefce has no specific powers to deal with such cases".

Birmingham University said it did not comment on staff pensions. Its annual report said the increase in Professor Sterling’s pension was in line with the council’s "succession planning decisions".

A spokesperson added: "Professor Sterling is one of the longest serving vice-chancellors and head of a large, successful and prestigious organisation that has some 29,000 students, 6,000 staff and a turnover of about £360 million.

"The agreement made with regard to his pension is consistent with similar cases among our senior academic staff retiring before 65, and was approved in the university as required by our governance arrangements."

Sir Colin Campbell, vice-chancellor of Nottingham University, has one of the highest pension contributions, totalling £39,589 in 2005-06, up from £34,416 the year before. The university said the figure was decided by independent members of its remuneration committee and that it "reflects fairly the level received by those who lead highly successful international universities".

David Melville, vice-chancellor at Kent University, received a one-off pension payment of £100,000 in 2005-06. A spokesperson said: "This was made following changes to the pension legislation last April, which allowed all universities to supplement contributions made in previous years and bring them up to a level that would have been paid had an Inland Revenue salary cap not been applied."

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