Renumeration Report

Remuneration Policy

Until 3 May 2007, the basic salary for Assembly Members was set at 76.5% of the level determined for MPs. In recognition of increased responsibilities under the Government of Wales Act 2006 and following advice from a panel of four independent members and one Commissioner, the Commission determined that, with effect from 4 May 2007 the basic salary for AMs should be set at 82% of the level determined for MPs.

The annual basic salary for Assembly Members, excluding employer’s National Insurance and pension contributions as at 1 April 2007 was therefore £46,804 rising to £50,169 on 4 May 2007 and to £50,692 on 1 November 2007.  Nine Members opted not to draw their full entitlement.

The following Members were entitled to additional annual salaries as follows:

The Commission does not provide any benefits-in-kind.

Assembly Members are members of the National Assembly for Wales Members’ Pension Scheme for which separate annual accounts are published via the Assembly website www.assemblywales.org.

The Assembly Commissioners received no additional remuneration in relation to their Commissioner role during 2007-08.

The Commission pays the salaries and related costs of Welsh Ministers and these are disclosed as a note within the Welsh Assembly Government Consolidated Resource Accounts though are charged to the Commission’s resource accounts.

The independent advisers were appointed on 5 November 2007 for a three-year period and receive non-pensionable emoluments of £5,000 per annum (£7,000 per annum for the Chair of the Corporate Governance Committee).  

The emoluments were paid either directly to the advisers or via their employer, if requested.

The remuneration of the Chief Executive is determined by the Commission. The remuneration of the three directors is determined by the Chief Executive in consultation with the Commission. Paragraph 3 of Schedule 2 to the Government of Wales Act 2006 requires the Commission to ensure that the terms and conditions of Assembly staff are broadly in line with those applying to Welsh Assembly Government staff. For 2007-08, the Commission’s senior management were remunerated in line with senior civil servants. The Remuneration Committee, established during 2007-08, has been consulted on proposals to create a unified pay scale for all staff including the senior management.

Service Contracts

Appointments of Commission staff, on terms and conditions set by the Commission, are made on merit on the basis of fair and open competition but also include provision for circumstances when appointments may otherwise be made. These principles are in line with civil service arrangements. Staff are not members of the Civil Service but are entitled to membership of the Principal Civil Service Pension Scheme (PCSPS).

Unless otherwise stated below, Assembly staff covered by this report hold appointments which are open-ended until they reach normal pensionable age under the PCSPS. They may then apply to continue their employment beyond that age. Early termination, other than for misconduct, would result in the individual receiving compensation as set out in the Civil Service Compensation Scheme.

Salaries and Pension Entitlements

The following sections provide details of the remuneration and pension interests of office holders and senior staff. These are presented in banding ranges for salary and pension. Due to certain factors being incorrect in last years CETV calculator (provided by the Cabinet Office) there may be a slight difference between the final period CETV for 2006/07 and the start of period CETV for 2007/08.

Salary

Salaries in the above table are the amount earned in the financial year and include all remuneration payable. They do not include National Insurance or Superannuation contributions. The salary costs for the Presiding Officer and Deputy Presiding Officer were a direct charge on the Welsh Consolidated Fund with effect from May 2007.

Cash Equivalent Transfer Values

A 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 spouse’s pension contingently payable from the scheme. A CETV is the amount payable by a pension scheme or arrangement to secure pension benefits in another pension scheme or arrangement when the member leaves a 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 the disclosure applies. The CETV figures include the value of any pension benefit in another scheme or arrangement which the individual has transferred to the relevant scheme and for which the scheme has received a transfer payment commensurate to the additional pension liabilities being assumed. They also include any additional pension benefit accrued to the scheme member as a result of their purchasing additional years of pension service in the scheme at their own cost. CETVs are calculated within the framework prescribed by the Institute and Faculty of Actuaries and do not take account of any actual or potential reduction to benefits resulting from Lifetime Allowance Tax which may be due when pension benefits are drawn.

Real Increase in CETV

The real increase in CETV reflects the increase effectively funded by the employer. It does not include the increase in accrued pension due to 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 the period. The factors used to calculate the CETV for the PCSPS were revised on 1 April 2005 on the advice of the Scheme Actuary.

Benefits in kind

No benefits in kind were paid to the Chief Executive, Directors, the Presiding Officer, Deputy Presiding Officer or Assembly Commissioners.

Pensions

Pension benefits for Assembly staff are provided through the Principal Civil Service Pension Scheme (PCSPS) arrangements. The PCSPS is an unfunded multi-employer defined benefit scheme but the Commission is unable to identify its share of the underlying assets and liabilities. The scheme actuary valued the scheme as at 31 March 2007. Details can be found in the resource accounts of the Cabinet Office: Civil Superannuation (www.civilservice-pensions.gov.uk). For 2007-08, employer contributions were payable at one of the four rates in the range 17.1% to 25.5% of pensionable pay, based on salary bands (unchanged from the rates in 2006-07). The scheme’s Actuary reviews employer contributions every four years following a full scheme valuation. The contribution rates are set to meet the cost of the benefits accruing during 2007-08 to be paid when the member retires, and not the benefits paid during this period to existing pensioners.

From 1 October 2002, employees may be in one of four statutory based 'final salary’ defined benefit schemes (classic, premium, classic plus and nuvos). The schemes are unfunded with the cost of benefits met by monies voted by the UK Parliament each year. Pensions payable by these schemes are increased annually in line with changes to the Retail Price Index. New entrants joining between 1 October 2002 and 29 July 2007 opted between membership of premium or joining a good quality 'money purchase’ stakeholder based arrangement with a significant employer contribution (partnership pension account). New entrants on or after 30 July 2007 may join the nuvos scheme or opt for a partnership pension account.

Employee contributions are set at the rate of 1.5% of pensionable earnings for Classic and 3.5% for Premium, Classic Plus and nuvos. Benefits in Classic accrue at the rate of 1/80^th of the pensionable salary for each year of service. In addition, a lump sum equivalent to three years’ pension is payable on retirement. For Premium, benefits accrue at the rate of 1/60^th of final pensionable earnings for each year of service. Unlike Classic, there is no automatic lump sum, but members may commute some of their pension to provide a lump sum. Classic plus is essentially a variation of Premium, but with benefits in respect of service before 1 October 2002 calculated broadly as per Classic. Nuvos is a career average scheme where benefits accrue at a rate of 2.3 per cent of salary in each year, revalued in line with the Retail Prices Index at the end of each year

The partnership pension account is a stakeholder pension arrangement. The employer makes a basic contribution of between 7 and 15% (depending on the age of the member) into a stakeholder pension product chosen by the employee. The employee does not have to contribute but where they do make contributions, the employer will match these up to a limit of 3% of pensionable salary (in addition to the employer’s basic contribution). Employers also contribute a further 0.8% of pensionable salary to cover the cost of centrally-provided risk benefit cover (death in service and ill health retirement).

Further details about the PCSPS arrangements can be found at the website www.civilservice-pensions.gov.uk

Assembly Members belong to the National Assembly for Wales Members’ Pension Scheme which is a defined benefit scheme and applies to the total salary entitlement of members including amounts paid to office holders and Welsh Ministers.  The Scheme is administered by Trustees, and is wholly independent to the Assembly Commission.  The Scheme’s accounts are available at www.assemblywales.org

The main benefits of the scheme are an immediate pension of either 1/50^th or 1/40^th of final salary for each year of service on retirement at age 65. Pensions are increased annually in line with changes in the Retail Price Index. Members pay a contribution equivalent to 6% of their total salary (including any additional elements receivable for office holders and Welsh Ministers) for an accrual rate of 1/50^th or 10% of their total salary for an accrual rate of 1/40^th,with the Commission contributing an employer contribution representing 23% of their total salary.

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