Annual Report and Accounts 2024-25

Remuneration report

Remuneration policy

The remuneration of AiB’s management and employees is set by the Scottish Government under its standard terms and conditions of employment. Advisory Board remuneration and pension benefits are contained within this Remuneration Report.

The minimum and maximum levels for each pay band are set each year by the Scottish Government, taking into account the recommendations of the Senior Salaries Review Body.

Service contracts

The Constitutional Reform and Governance Act 2010 requires Civil Service appointments to be made on merit based on fair and open competition. The recruitment principles published by the Civil Service Commission specify the circumstances when appointments may be made otherwise.

Unless otherwise stated below, the officials covered by this report hold appointments which are open-ended. Early termination, other than for misconduct, would result in the individual receiving compensation as set out in the Civil Service Compensation Scheme.

Further information about the work of the Civil Service Commission can be found on the Civil Service Commission website.

Salary and Pension entitlements

The following sections in this report which are subject to audit are labelled. This section provides details of the remuneration and pension interests of our board for the year to 31 March 2025.

Salary

Salary includes gross salary, overtime and any allowance to the extent that it is subject to UK taxation.

Benefits in kind

The monetary value of benefits in kind covers any benefits provided by AiB and treated by HM Revenue and Customs as a taxable emolument. There were no benefits in kind within 2024-25 (2023-24 - £nil).

Bonuses

There were no bonuses paid during 2024-25 (2023-24 - £nil).

Pension benefits are provided through the Civil Service pension arrangements. Before 1 April 2015, the only scheme was the Principal Civil Service Pension Scheme (PCSPS), which is divided into a few different sections – classic, premium, and classic plus provide benefits on a final salary basis, whilst nuvos provides benefits on a career average basis. From 1 April 2015 a new pension scheme for civil servants was introduced – the Civil Servants and Others Pension Scheme or alpha, which provides benefits on a career average basis. All newly appointed civil servants, and the majority of those already in service, joined the new scheme.

The PCSPS and alpha are unfunded statutory schemes. Employees and employers make contributions (employee contributions range between 4.6% and 8.05%, depending on salary). The balance of the cost of benefits in payment is met by monies voted by Parliament each year. Pensions in payment are increased annually in line with the Pensions Increase legislation. Instead of the defined benefit arrangements, employees may opt for a defined contribution pension with an employer contribution, the partnership pension account.

In alpha, pension builds up at a rate of 2.32% of pensionable earnings each year, and the total amount accrued is adjusted annually in line with a rate set by HM Treasury. Members may opt to give up (commute) pension for a lump sum up to the limits set by the Finance Act 2004. All members who switched to alpha from the PCSPS had their PCSPS benefits ‘banked’, with those with earlier benefits in one of the final salary sections of the PCSPS having those benefits based on their final salary when they leave alpha.

The accrued pensions shown in this report are the pension the member is entitled to receive when they reach normal pension age, or immediately on ceasing to be an active member of the scheme if they are already at or over normal pension age. Normal pension age is 60 for members of classic, premium, and classic plus, 65 for members of nuvos, and the higher of 65 or State Pension Age for members of alpha. The pension figures in this report show pension earned in PCSPS or alpha – as appropriate. Where a member has benefits in both the PCSPS and alpha, the figures show the combined value of their benefits in the two schemes but note that the constituent parts of that pension may be payable from different ages.

When the Government introduced new public service pension schemes in 2015, there were transitional arrangements which treated existing scheme members differently based on their age. Older members of the PCSPS remained in that scheme, rather than moving to alpha. In 2018, the Court of Appeal found that the transitional arrangements in the public service pension schemes unlawfully discriminated against younger members (the “McCloud judgment”).

As a result, steps are being taken to remedy those 2015 reforms, making the pension scheme provisions fair to all members. The Public Service Pensions Remedy is made up of two parts. The first part closed the PCSPS on 31 March 2022, with all active members becoming members of alpha from 1 April 2022. The second part removes the age discrimination for the remedy period, between 1 April 2015 and 31 March 2022, by moving the membership of eligible members during this period back into the PCSPS on 1 October 2023.

The accrued pension benefits, Cash Equivalent Transfer Value and single total figure of remuneration reported for any individual affected by the Public Service Pensions Remedy have been calculated based on their inclusion in the PCSPS for the period between 1 April 2015 and 31 March 2022, following the McCloud judgment. The Public Service Pensions Remedy applies to individuals that were members, or eligible to be members, of a public service pension scheme on 31 March 2012 and were members of a public service pension scheme between 1 April 2015 and 31 March 2022. The basis for the calculation reflects the legal position that impacted members have been rolled back into the PCSPS for the remedy period and that this will apply unless the member actively exercises their entitlement on retirement to decide instead to receive benefits calculated under the terms of the alpha scheme for the period from 1 April 2015 to 31 March 2022.

The partnership pension account is an occupational defined contribution pension arrangement which is part of the Legal & General Master trust. The employer makes a basic contribution of between 8% and 14.75% (depending on the age of the member). 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 0.5% of pensionable salary to cover the cost of centrally provided risk benefit cover (death in service and ill health retirement).

More information on the public service pension remedy and how it affects members can be found here- Public Service Pension Remedy

Further details about the Civil Service pension arrangements can be found at the website www.civilservicepensionscheme.org.uk.

The Scheme Actuary valued the PCSPS as at 31 March 2020. You can find details here -  Civil Service Pension Scheme 2020 Valuation Report.

This 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 contingent spouse’s pension payable from the scheme. A CETV is a payment made 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 pension benefits, they have accrued in their former scheme. The pension figures shown relate to the benefits that the individual has accrued because of their total Ministerial service, not just their current appointment as a Minister. CETVs are calculated in accordance with The Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008 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 taken.

Real increase in CETV

This is the element of the increase in accrued pension funded by the Exchequer. It excludes increases due to inflation and contributions paid by the Minister. It is worked out using common market valuation factors for the start and end of the period.

Fair pay disclosure

AiB holds Living Wage Employer accreditation. This means every member of AiB staff earns at least the real Living Wage which is a rate in excess of the minimum wage. The UK Living Wage hourly rate for 2024-25 was £12.60 which is £1.16 more than the minimum wage (for staff 21 years old and over).

Independent research has highlighted benefits of the real Living Wage to both staff and employers, including productivity, reduced absenteeism and better staff morale.

AiB, as part of the Scottish Government, is expected to apply the real Living Wage as a gross salary equivalent of at least £22,932. As of 31 March 2025, the lowest salary across the Scottish Government and the lowest paid in AiB was £26,469. Staff who work part-time or part-year receive a pro-rated amount.

When a supplier contract with AiB is up for renewal or tender, we actively encourage contractors to consider implementing the real Living Wage if they have not already done so. More information on the real Living Wage can be viewed on the Living Wage website.

Pay multiples (subject to audit)

In accordance with the Financial Reporting Manual, reporting bodies are required to disclose the relationship between the remuneration of the highest-paid director in their organisation and the median remuneration of the organisation’s workforce.

Under Statutory Instrument 2017 No. 328, AiB is required to report the facility time used by any staff members who are trade union representatives. This information is also reported on the AiB website. 

During 2024-25, there were two relevant union officials employed at AiB. Cumulatively they spent 2.2% of their working hours on facility time.  

The percentage of pay bill spent on facility time was 0.04%. Total time spent on paid trade union activities was 70% of total paid facility time hours.