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 ÖйúAƬ 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.

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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.

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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.

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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.

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It¡¯s not for you, taxman

Asked about the shifting balance between pay and pensions, Michael Harrison, a principal in the ÖйúAƬ 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¡±.

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jack.grove@tsleducation.com.