Select Committee on Treasury Minutes of Evidence

Memorandum submitted by the Royal Mint

Q66.   Your Committee asked for a note explaining the 2005-06 increase in pension costs incurred by the Royal Mint.[4]

  In 2005-06 employees contributions of £3.125 million were paid to the Principal Civil Service Pension Scheme at rates of 16.2% to 24.6% of pensionable pay based on salary bands.[5] In the previous year employees contributions of £2.237 million were paid at rates of 12.0% to 18.5% of pensionable pay based on salary bands.[6]

  The Cabinet Office by way of a "Employer Pensions Notice" advises the pension rates that are applied. The change of rates applying to 2005-06 represents an underlying increase in pension costs of 34% compared to 2004-05:
Pension costs 2004-05[7] 2,237
Percentage increase in wages and salaries applied to 2004-05 pension costs—2.53%[8] 57
Sub total2,294
Increase in pension rates—34%780
Sub total3,074
Other factors (change in mix of salary bands) 52

Q62.   I promised to provide in confidence to your Committee details about the Royal Mint's bonus scheme when it was put in place.[9]

  As I indicated to your Committee (Questions 58 to 61),I felt uncomfortable at setting targets for a 2006-07 bonus scheme because they would be so dependent on the success of the various improvement programmes I have put in place. The Royal Mint's Remuneration Committee met on 6 November and endorsed this position. Therefore, there will be no bonus scheme for Directors for 2006-07. The Remuneration Committee agreed to review the position again in March next year with a view to introducing a new bonus scheme for 2007-08. I will update your Committee on progress at that time.

  However, given your Committee's interest in the subject, it might be helpful if I describe in more detail the bonus scheme that operated for 2005-06. As I advised your Committee (Question 60) no payments were made under the terms of this bonus scheme. As noted in our 2005-06 Accounts the bonus scheme (or "Short-Term Incentive Plan—STIP") applied to Executive Directors and other key managers. Cash awards of up to 20% (30% for the Chief Executive) were payable to participants dependent upon the achievement of corporate and individual performance targets, such achievement to be agreed by the Remuneration Committee. The corporate and individual targets which applied to Executive Directors are summarised in the attached annex. [10]

November 2006

Band 1 (£17,000 and under) 16.2%

Band 2 (£17,001 to £35,000) 18.6%

Band 3 (£35,001 to £60,500) 22.3%

Band 4 (£65,50 and over) 24.6%.

Band 2 (£17,001 to £36,000) 13.5%

Band 3 (£36,001 to £62,000) 16.5%

Band 4 (£62,001 and over) 18.5%.

4   Ev 8 Back

5   See Note 13 to 2005-06 Accounts. Back

6   Band 1 (£17,000 and under) 12.0% Back

7   See Note 13 to 2005-06 Accounts. Back

8   See Note 5 to 2005-06 Accounts. Wages and salaries £20,802,000 (2005-06) and £20,920,000 (2004-05). Back

9   Ev 8 Back

10   Not printed Back

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