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Annual Report and Accounts 2009 – 2010 

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Contents 

Foreword and forward look by the Chief Executive 

1. Introduction 

2. About Us 

Agency Mission, Core Values and Aims 

Our Stakeholders 

Key Targets 

Leadership and Governance 

Staff – our greatest asset 

Corporate Social Responsibility 

3. Management Overview 

Operations 

Occupational Pensions Policy 

IT Support Unit 

Corporate Services 

Annex A – Scottish Statutory Instruments made in 2009/10 

Annual Accounts 

Scottish Public Pensions Agency Annual Report 2009-2010 

1

Foreword and Forward Look 

by the Chief Executive 


This document sets out our Annual Report and Accounts for the period from 1 April 2009 to 31 March 2010. 

This is the seventeenth such report since we became an Agency in 1993 and the eighth since our 

relocation to Tweedbank in 2002. 

The past twelve months have once again delivered both success and challenge in equal measure. The 

Agency has continued to implement its aggressive multi-year programme of multiple business reform which 

aims to enhance the efficiency, quality and effectiveness of its core pensions administration service. A 

major landmark was achieved during the year with the successful implementation of the new pensions 

administration casework system for members of the Scottish NHS Superannuation Scheme. The 

implementation of the NHS phase of this project in September 2009 followed on from the successful 

implementation of the Teachers’ phase a year earlier. It means that the Agency now administers all its 

pension casework processes on a single state of the art IT system. This has already begun to deliver a 

number of significant business efficiencies and service improvements, which we will build on during the 

next twelve months as our familiarity with and experience of the new system increases. 

During the course of the year the Agency was successful in meeting all its key performance targets relating 

to timeliness and accuracy in the calculation and payment of pension benefits. These activities constitute 

the core business of the Agency and account for the majority of the Agency’s staffing and other resource 

allocations. However, in addition to these routine annual tasks, the Agency has also dealt with a number of 

significant one-off tasks which have also contributed to a successful business year. Principal amongst 

these was the completion of phase one of the NHS Pensions Choice Exercise. This task, which responded 

to a Government commitment to provide all members of the NHS pension scheme with a choice between 

remaining in the 1995 section of the scheme or transferring to the 2008 section of the scheme, involved 

sending personalised Pension Choice Statements to more than 130,000 scheme members. The fact that 

this part of the complex exercise was conducted on time and on budget is testament to the very 

considerable amount of planning and testing conducted by the Agency which underpinned the exercise. 

The Agency also successfully completed the biennial National Fraud Initiative exercise, which cross 

references Agency pensions data against similar financial information held by other public sector 

organisations. As a result of changes made following previous NFI rounds, the amount of pension 

overpayments identified by the exercise has reduced substantially compared to previous years. In 2008- 

2009 overpayments of £0.4 million were identified; this compares with £5.1 million in 2002-2003, £5.3 

million in 2004-2005 and £1.8 million in 2006-2007. 

The Agency is also responsible for advising the Scottish Ministers on pension policy issues. A large 

number of regulatory amendments were delivered across the schemes to which Scottish Ministers have a 

responsibility, and a new financing system for the Police and Fires schemes was agreed. 

The Agency also devoted significant attention during the year to developing a new and more resilient 

system for recording and reconciling the amounts of pension contributions received from around 1200 

employer organisations. This work has resulted in development of a much more robust recording system, 

which will enable the Agency to significantly reduce both the number of errors in contribution payments and 

the levels of outstanding debt. 

Internally, the Agency has continued to strengthen its corporate governance and management 

arrangements. The Agency’s External Management Board met five times during the year, including an 

Away-day which considered the Agency’s response to a number of long term strategic planning issues. The 

External Management Board was ably supported by an independent Audit Committee which met quarterly 

to consider risk management and governance issues. The robustness of the Agency’s risk management 

and contingency planning arrangements was tested during the course of the year as the Agency responded 

to a series of issues ranging from a reduction in its planned financial allocation from the Scottish 

Government to severe weather which disrupted service during January. I would like to thank the Board and 

the Audit Committee for their valuable contribution to the work of the Agency over the year. The Board 

endorsed a number of strategic documents during the course of the year which were designed to ensure 

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that the Agency continues to deliver its current high levels of service against an unprecedentedly difficult 

financial context. New strategies and action plans for the measurement of organisation performance, for 

the development of more reliable unit costs data, for communications with external and internal 

stakeholders, for staff training and skills development, and for records management, were among many 

new initiatives agreed during the course of the year. 

The Agency was honoured during the year to receive Silver Status accreditation from Investors in People 

Scotland. The Agency remains one of only a handful of public bodies in Scotland to achieve this level of IiP 

accreditation. 

Given the nature of the Agency’s core business tasks, an essential requirement of its business is to ensure 

that personal data is handled safely and securely. The Agency conducts quarterly reviews of all its data 

handling arrangements and during the year every single member of staff achieved Cabinet Office level 1 

status in protecting information. 

None of these achievements would have been possible without the dedication and commitment of our staff, 

and I would like to formally acknowledge their contribution to the Agency’s success. 

Looking ahead to 2010-11, the processes of business change and continuous improvement will continue 

apace. During 2010-11 we intend to deliver the final phase of our new IT system, which will conclude a 

major programme of business change and investment that first commenced in 2006. We will continue to 

seek further business efficiencies and to compare our unit costs against similar organisations in the UK and 

abroad. This work is particularly important given the fragile state of the public finances and the likelihood of 

significant reductions in the overall scale of funding made available to the Scottish Government and to the 

Agency from 2011 and beyond. 

Taken together, 2010-11 promises to be another challenging year for the Agency. However, based on its 

track record and drawing upon its increasing knowledge and competence of its staff, I am confident that we 

will succeed in meeting our business objectives and that the Agency will continue to provide a world class 

service to its customers. 

Neville Mackay 

Chief Executive 

3

1. Introduction 

Status 


The Scottish Public Pensions Agency (SPPA) is an Executive Agency of the Scottish Government. Its 

principal role is to administer the pensions, premature retirement and injury benefits schemes for 

employees of the National Health Service in Scotland (NHSSS) and for members of the Scottish Teachers’ 

Superannuation Scheme (STSS). The Agency also has responsibility for: 

• developing the regulations covering the NHSSS, STSS, Local Government, Police and Fire 

pensions schemes in Scotland; 

• determining appeals made by members of these schemes; and 

• providing pension administration services to third parties on a contract basis. Current 

customers include the Scottish Parliamentary Pension Scheme, the Legal Aid Board for 

Scotland, and the Northern Ireland Assembly. 

The overall framework within which the Agency operates is set out in its Framework Document which can 

be accessed via the SPPA website at www.sppa.gov.uk. 

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2. About Us 

Agency Mission, Core Values and Aims 


Mission Statement 

The SPPA’s mission is to deliver a high quality, customer-focussed and cost-effective service to its 

stakeholders. 

Core Values 

Our core values are: 

• to put our customers first; 

• to support our staff so that they are empowered to achieve and deliver excellence; and 

• to maintain the highest standards of probity and governance whilst using our resources efficiently 

and effectively. 

Aims 

The aims of SPPA, as set out in its Framework Document, are as follows: 

• to administer, on behalf of the Scottish Government, the public service pension, premature 

retirement compensation and injury benefit schemes for which the Scottish Ministers have 

administrative responsibility so as to provide an efficient and effective service for the benefit of 

those who use the schemes, at an economic cost to the public purse; 

• to prepare, in accordance with the Scottish Government’s policy, the regulations governing these 

and other schemes for which the Scottish Ministers have regulatory responsibility; 

• to determine questions under the regulations on which there is a right of appeal to Scottish 

Ministers; and 

• to advise the Scottish Ministers on occupational pensions policy generally. 

The Agency’s targets for 2008-2011 are listed in the Corporate Plan which can be accessed through the 

SPPA website. 

5

Our Stakeholders 

Our stakeholders include: 


Our customers: existing pensioners, members, employing organisations and the Government Departments 

to which we provide pension administration services and policy input; 

Our staff; 

Our suppliers. 

We are also aware of our Corporate Social Responsibility both to our neighbours and to the environment. 

Key Targets 

Target Definition 2008‐2009 2009 ‐ 2010 

Pay 100% of all existing NHS and STSS 

pensions and 98% of awards on the due 

date. 

Ensure 99% of all existing payments are 

correct at the point of payment. 

Improve % of all new pension awards 

being correct at authorisation stage from 

92% to 95% by end of 2010-11. 

Collect 99% of NHS contributions and 

STSS contributions within the period 

prescribed by legislation. 

Ensure all eligible scheme members, for 

whom up to date data are available, receive 

accurate annual benefit statements. 1 

Publish Agency and scheme accounts 

within identified timescales and manage 

Agency funds in accordance with SG and 

HMT guidelines. 

Maintain and where possible improve 

customer satisfaction levels. 2 

Deliver efficiency gains and business 

improvements specified in Business Plan 

Key Tasks 

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Pensions 100% 

Awards 99.6% 

NHS: 99.9% 

STSS 98.9% 

Pensions 100% 

Awards 98.98% 

99% 99% 

97% 94.27% 

99.18% 

98.66% 

Achieved 97.82% for STSS 

Achieved On Target 

Satisfaction rating: 

Employers 97.3%; 

Members 96.5% 

STSS Live Sept 

2008 

Satisfaction rating: 

Employers 80.3%; 

Members 83.7% 

On target. 

Efficiency savings of 

7% achieved. 

Key performance 

indicators for 

service met 

Notes 

1. No NHS statements were issued in 2009/10 because of the issue of NHS Choice documentation 

which provided members with details of pension benefits. 

2. Satisfaction ratings were adversely affected by some respondents’ assessment of the new 

telephone call management system, which is being modified to address those criticisms.

Leadership and Governance 

Policy, Strategy & 

Development Director 

Chad Dawtry 

Operations 

Director 

Ian Clapperton 

Chief 

Executive 



As at 31 st March 2010 the Agency reported directly to the Permanent Secretary of the Scottish 

Government. 

Its day to day management is overseen by the individual executive directors and through the Senior 

Management Team collectively. As at 31 st March 2010, the Agency’s Senior Management Team 

comprised: 

IT Director and Major 

Projects 

7 

Pam Brown 

The Agency also has an External Management Board comprising: 

James Taylor (chair), Julia Edey, Alyson Stafford and Alex Smith. 


Director 

Chris Fenton 

The Agency’s Audit Committee is chaired by Alex Smith and comprises: Julia Edey, and James Taylor. 

The Agency’s Chief Executive and Corporate Services Director together with Internal and External Audit 

attended the Audit Committee meetings during 2009/10. The Audit Committee meetings are also attended 

by the Agency’s Directors of Operations, Policy and IT. 

Risk Management 

Risk Management is a key element in the Agency’s governance arrangements. The Agency has a 

corporate risk register, which is reviewed periodically by the Senior Management Team and is reported to 

the Audit Committee. There is the option to have a separate risk register for specific projects and this has 

been taken for the procurement and implementation of the new Pension Administration Software System 

(PAS) and other major projects. The PAS risk register is owned by the Project Board and is reviewed at 

each Project Board meeting. 

More detail on our approach to risk management can be found in the annual accounts. 

Staff – our greatest asset 

Employment Policy/Culture 

As an Agency of the Scottish Government the SPPA recognises the growing employee engagement culture 

within the Civil Service. Over the last 8 years in Tweedbank we have developed staff to a high level through 

a conscientious and focussed approach to staff recruitment and training. Our efforts have been recognised 

through IiP accreditation, which was achieved in June 2006 (almost a year ahead of schedule and through 

the subsequent achievement of IiP Silver Status in 2009). One of our aims over the next 3 years is to 

encourage the retention of quality staff, allowing them the opportunity to develop their skills and continue to 

benefit the Agency. We should recognise that although we continue to promote opportunities for 

continuous development from within, we will always be open to the loss of quality staff to other SG 

Directorates or private employers. There will therefore always be an annual staff turnover issue, but this 

will be an opportunity to further develop the potential in all our colleagues.


Over 95% of our current workforce lives within a 30 minute commute from the office. This adds to the 

friendly and supportive atmosphere which we continue to promote. 

We encourage staff involvement and openness by our Open Door policy which includes senior managers, 

directors and the Chief Executive. We have also provided staff with the opportunity to be involved with a 

wide range of Business Improvement issues and to attend meetings of the Agency’s Senior Management 

Team. 

Employees 

The HR role within Corporate Services adheres to Scottish Government HR Policy covering pay, 

attendance, performance, recruitment and disciplinary processes. The SPPA HR team has provided local 

staff with guidance and support relating to the SG policies at all times following current employment law. 

The Agency will implement a recruitment freeze from 2010-11 in order to allow it to live within its resource 

allocation. 

The SPPA and the SG support a wide range of family-friendly policies including: 

• Flexi-working (including alternative working patterns) 

• Parental leave 

• Paternity leave 

• Special leave 

• Career break opportunities 

• Childcare vouchers 

These policies have in the past helped to attract a large number of quality external applicants and interest 

from the local workforce. In the future we hope these policies help to retain staff and are a positive way to 

engage current staff. 

Our overall average number of staff in post (full time equivalent) was 245 during 2009-2010. Approximately 

35 members of staff work part time hours. 

We provide a quality environment which is clean and safe to work in. We have excellent equipment and up 

to date technology. We aim to have quick and effective communication systems, including the facilitation of 

effective interpersonal, team, directorate and Agency-wide relations. We aim to provide participative 

support to all colleagues and we should all feel encouraged and comfortable to be involved in the decisionmaking 

processes for the business. 

Corporate Social Responsibility 

We believe that acting responsibly should be fundamental to how we carry out every aspect of our 

business and that it is vital to earning and retaining the trust of our stakeholders and our employees. 

We know the value of our people and show this by encouraging their technical and managerial 

development, by recognising achievement and by looking after all aspects of their wellbeing. 

We recognise the environmental impact of our business and are working with the Scottish Ministers to 

tackle the threat of climate change by continually striving to reduce our impact on the environment. 

People 

The Agency’s talented and committed employees are essential to our continuing success and we take a 

holistic approach towards helping to strengthen their health and wellbeing. We actively encourage a 

healthy lifestyle by providing health checks, smoking cessation advice and lunchtime guidance seminars on 

nutrition and exercise. There are 4 trained Jog Leaders in the Agency and we have a regular running 

group that meets each week after work. The Agency achieved Healthy Working Lives accreditation during 

2009-10. 

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Environment 

The Agency continues to seek ways to improve its environmental performance, increase energy efficiency, 

and where possible minimise its use of resources. Our office building is designed to be energy efficient in 

terms of its fabric, services and appliances, and benefits from some renewable energy from solar panels. 

As part of its environmental strategy the Agency is committed to responsible energy management and 

practises energy efficiency to protect the environment and avoid unnecessary expenditure 

The Corporate Services Director is the senior manager responsible for environmental performance, and all 

staff members are responsible for ensuring that the environmental policy is observed and that resources 

are wisely used. 

Summary of progress against environmental performance targets 2009‐2010 

Objective – Use Energy Efficiently to Minimise Greenhouse Gas Emissions 

Energy and emissions reduction targets 

We set targets in two areas: 

1. Emissions of the greenhouse gas carbon dioxide (CO²) 

2. Kilowatt energy consumption for gas and electricity 

By using carbon dioxide emissions as a measure of our energy consumption, and setting targets to reduce 

them, we can focus more clearly on our impacts and the actual damage to the environment that we are 

responsible for. 

Corporate Target. Reduce carbon emissions from energy consumption by 3% of 2007‐2008 total by March 2011. 

2007-2008 Actual 175.36 tonnes CO 2 



2009-2010 Target 171.87 tonnes CO 2 

March 2011 Target 170.1 tonnes CO 2 

Progress: The target was missed during 2009-10 and the Agency’s overall emissions of carbon dioxide 

rose. The main reason for this was an increase in building occupancy hours and the significant reduction in 

mean temperatures during the autumn and winter. Despite this, emissions were 4.09% below 2004-05 

levels. We are confident that with the recent introduction of energy efficient machinery and increased 

control capability on our heating, water and lighting systems we can make up the difference by the target 

end-date of March 2011 

Target No 1 for 2009‐2010. Reduce kilowatt‐hour consumption of electricity used per full time equivalent 

employee by 2% of 2008‐2009 levels by March 2010. 

2008-2009 Actual 1269 kwh per person 

2009-2010 Actual 1313 kwh per person 

2009-2010 Target 1244 kwh per person 

Progress: The target was missed during 2009-10, with actual electricity consumption recorded at 321658 

kwh, 23596 kwh higher than the previous year. 

Target No 2 for 2009‐2010. Reduce kilowatt‐hour consumption of gas used per m2 by 2% of 2008‐2009 levels by 

March 2010. 

2008-2009 Actual 90.15 per m2 total usage 258,184 kwh 

2009-2010 Actual 85.13 per m2 total usage 243,824 kwh 

2009-2010 Target 89.25 per m2 total usage 255,612 kwh 

9


Progress achieved: Despite increased occupancy during the coldest months of the year this target was 

achieved due to increased control capability over the heating and hot-water systems and planned 

preventative maintenance on all mechanical installation. This resulted in a 5.6% reduction on our previous 

year’s consumption. 

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3. Management Overview 

Operations 

Background 


Operations Directorate employs the majority of the Agency’s workforce and deals with the administration of 

pensions for members of the NHS and STSS schemes. In addition it carries out pension administration 

under contract for the Scottish Parliamentary Pensions Service, Northern Ireland Assembly Members’ 

Pension Scheme & Scottish Legal Aid Board. Its role involves handling all pension events such as initial 

award, pensioner payments and transfers. The Directorate is the public face of the Agency dealing directly 

with more than 400,000 scheme members and beneficiaries and more than 1,200 employer organisations. 

Main activity for NHS and STSS membership is divided into functional teams - 

NHS STSS 

1. Practitioners and Injury Benefits 1. Transfers plus Service and Refunds 

2. Retirement Awards and Death Benefits 2. Retirement Awards including death and family 

Benefits 

3. Transfers 

4. Service, Refunds and MHO Queries 

Discrete specialist teams also handle a variety of tasks – 

Small Schemes: Pension arrangements for Scottish Parliament 

Special Projects: Pension Sharing on Divorce and Mis-selling 

Payroll: Payment of pensions to beneficiaries of NHS and STSS 

Stakeholder Liaison: Special one-off tasks such as the NHS Choice exercise. Handling member 

complaints and working with employers to improve liaison and the flow of data to 

the Agency 

Technical Support: Assisting staff with IT support and system improvements 

Key achievements of the Operations Directorate in 2009‐2010 

All the key performance indicators in respect of timeliness, quantity and accuracy of service were met 

during the year: 

Target Outcome 

Pay (1) 100% of all existing NHS and STSS pensions and(2) 

98% of new awards on the due date 

Achieved (1) 100% (2) 98.98% 

Ensure 99% of existing pensioner payments are correct Achieved 99% 

Improve accuracy of new awards from 92% to 95% by 2011 Achieved 94.27% 

Ensure that all eligible scheme members receive annual benefit 

statements 

Achieved 97.82% for STSS 

Note – no NHS statements were issued in 2009/10 because of the issue of NHS Choice documentation 

which provided members with details of pension benefits. 

11

Other achievements in the year 


Implementation of new Pensions Administration system 

The NHS migrated to the new system in September 2009. Work continues to resolve remaining 

functionality issues affecting some types of members e.g. practitioners. 

Web Pages and Member Guides 

Web pages were constantly updated and changes made to guides to reflect any changes to benefits. Employers’ 

newsletters were produced and the NHS employers guide replaced. 

Employer Outreach 

The Directorate maintained its efforts in working with stakeholders and in addition to regular liaison with 

NHS and STSS trade unions, we undertook a range of measures to establish a good working relationship: 

• Seminars for STSS and NHS employers 

• Meeting NHS payroll staff and Managers 

• Meeting GP practice managers and GPs 

• Meeting frequently with other UK schemes, and Government Departments 

Small Schemes 

The Small Schemes team provides a pensions calculation service for the Scottish Parliamentary Pension 

Scheme, (SPPS), Legal Aid (Scotland) Pension Scheme, (LA(S)PS), the Scottish Legal Aid Board 

Chairman Pension Scheme, (SLABC) and the Northern Ireland Assembly Members Pension Scheme. 

Service level agreements are in place for the work the Agency undertakes. The terms of these agreements 

were all met or exceeded. 

Pension Sharing on Divorce 

In line with legislation the Agency charges for services to Courts and solicitors. The income generated was 

as follows – 

Period Charges 

01/04/09 to 31/03/10 £100,202 

Valuations 

The NHS 2004-08 valuation is now underway and the STSS 2005-09 valuation will commence in May 

2010. Both valuations will complete during 2010-11 and the results will be effective from 2012. 

NHS Choice 

All officer members entitled to a Choice under the terms of the pension reforms introduced to NHS in 2008 

were issued with personalised documentation to enable them to make their choice. Practitioner members 

will receive their documentation early 2010-11. SPPA are presently handling the outcomes from the 

exercise and resolving enquiries. Because of the complex nature of some pensions in the NHS a high level 

of member enquiry is being experienced, however the Agency is on course to complete the exercise on 

schedule during 2010-11. 

NHS Agenda for Change 

Work continues with the revisions of pensions for members affected by Agenda for Change. The work will 

continue until all employers have finalised their review of salary scales and resolved any personal disputes. 

Employer engagement 

Together with our main employers on both NHS and STSS we discussed and agreed improvements to the 

process by which data about members is transferred to SPPA. Agreement has been agreed on the type, 

frequency and format of data transfers. 

National Fraud Initiative 

SPPA successfully undertook the biennial check of pensioner payments in conjunction with DWP and local 

authorities in an effort to identify wrongly paid pensions. 

12


Key challenges for 2010‐11 

The Directorate has many tasks for the year ahead. In addition to key targets on accuracy and service 

delivery, the following provide the context for our work – 

1. Complete the NHS 2008 and the STSS 2009 valuations 

2. Complete work associated with the NHS Choice exercise 

3. Consolidation of new systems for NHS/STSS administration 

4. Making further business efficiencies 

5. Further improving data quality 

Scheme Statistics 

NHS(S) Superannuation Scheme from 1 April 2009 ‐ 31 March 2010 

Membership 

Active Members 160014 

Preserved Members 44922 

Pensioners and dependants in payment 74927 

Awards of Pension including revisions made during the year 5364 

Transfers In and Out 2253 

Refunds of contributions to leavers 2674 

Scottish Teachers’ Superannuation Scheme 1 April 2009 – 31 March 2010 

Membership 

Active Members 78452 

Preserved Members 15382 

Pensions and dependants in payment 58766 

Awards of Pension (including revisions) made during year 4677 

Transfers In and out of Scheme 1941 

Refunds 525 

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Policy Strategy and Development 


This was another busy year for the Directorate, which brought with it a mixture of: tasks from the most 

recent reforms; policy updates; and work to consolidate regulations. The Directorate was also involved in 

work to improve the quality of the Agency’s management information and its ability to respond to the 

Scottish Government’s Public Service Reform agenda. 

2009-10 highlights included: 

• delivery of seven sets of regulations across four of the five schemes the Agency leads on – the Local 

Government Pension Scheme (LGPS), NHS Superannuation Scheme (NHSSS), Police Pension 

Scheme (PPS) and Fire-fighter’s Pension Scheme (FPS); 

• substantive progress on consolidations of both Teachers’ (STSS) and NHSSS regulations; 

• providing the Scottish Government’s technical input to UK reviews of NHSSS and Police Injury 

Benefits; 

• addressing issues around Police and Fire-fighter commutation rates as well as the implications of 

new tax arrangements from 6 April 2010; 

• providing technical advice and support to Scottish Government Justice Department officials to 

successfully introduce a new financing system for Scottish police and fire fighter pensions from 1 

April 2010. 

• leading tri-partite (employer, Trades Union and Scottish Government) development of cost-sharing 

and revised governance arrangements for the LGPS; 

• commissioning and leading a tri-partite review of STSS Ill-Health arrangements; 

• ensuring the legislative powers were in place for the delivery of the NHSSS Choice exercise; 

• providing guidance and advice around the Public Services Reform Bill, the Scottish Government’s 

Simplification Programme and related matters; 

• further developing the Agency’s approach to performance management, including access to 

benchmarking information through: 

o consolidating our involvement in the Benchmarking of Corporate Services across the Scottish 

Government, its Executive Agencies and NDPBs; and 

o becoming one of the lead public sector organisations in the UK to subscribe to the CEM 

benchmarking service. 

• playing an active role in the Local Government led LGPS Shared Services Pathfinder project; 

• exploring, with others, opportunities to both provide and benefit from Shared Service opportunities; 

• delivering a revised Records Management policy. 

Taken together, these actions mean that the Agency, and the pension schemes it oversees, are wellplaced 

to face an interesting year that we expect will include the UK Government’s Commission into further 

reform of public sector pensions. 

14

IT Support Unit 


ISU 

The IT Support Unit supports the Agency and its staff by delivering IT services and providing the following 

key functions: 

• provision and improvement of IT services and support across the whole Agency. This involves 

installation and maintenance of software, hardware and telecommunications facilities and running 

production schedules; 

• the management of contracts with third party suppliers of IT, office equipment and telecommunications 

on behalf of SPPA and responsibility for negotiating terms, conditions and cost; 

• responsibility for ensuring that all SPPA IT systems are approved to interface with the Scottish 

Government managed SCOTS network; 

• database administration, ensuring that the Pensions Administration and Pensions Payroll System are 

running as effectively as possible. This includes completing server maintenance procedures, disaster 

recovery exercises, checking system backups, monitoring system performance and dealing with 

normal day to day problems; 

• ensuring all staff are made aware and understand data and IT security rules and guidance. 

During the course of the year, the team has continued to schedule and run all the necessary IT processes 

and has contributed to the following achievements: 

• the issue of Annual Benefit Statements to STSS members In November 2009; 

• improvements to Payroll processes to provide a more efficient and effective service to the organisation; 

• implementation of back up Payroll system offsite at the SG office in Saughton House, Edinburgh; 

• decommissioned old EDM system; 

• taken on system support of new AXISe Pension Administration System. 

2010 –11 Plans 

• ensuring that new Service Level Agreements are fully implemented; 

• ensuring that disaster recovery procedures are in place and fully tested as part of the Agency’s 

Business Continuity Plan for the Heywood Pensions Admin System and the Northgate Payroll 

Systems; 

• implementing improvements to all services. 

15


Pension Change Project 

The Pension Change Project (PCP) Team also forms part of the IT Directorate. The role of the PCP Team 

has been to lead the implementation a new pension administration system to deliver the following business 

objectives: 

• to continue to deliver business as usual for current scheme members; 

• to provide efficiencies by streamlining business processes; and 

• to manage the new benefit arrangements for NHS and STSS employees. 

The PCP team is responsible for the delivery of all Pension Change Projects using Prince 2 project 

management methodology 

During the course of the year, the PCP team has contributed to the following achievements: 

• implementation of the new Pension Administration system for the NHS pension scheme in September 

2009; 

• worked with the supplier and Agency colleagues on the design, development and testing of further 

functionality; 

• setting up a new Agency Programme Board and providing Project Management advice and guidance 

to colleagues across the Agency. 

The project team are planning to lead the development of requirements for web services for employers 

and employees and functionality improvements. 

The team will continue to support the Agency Programme Board and lead on projects when requested. 


The Agency’s Corporate Services Directorate covers the functions of Finance, Human Resources, 

Training, Development and Quality Assurance, Corporate Communications and Facilities Management. 

Training Development and Quality Assurance 

The development training team coordinated the substantial efforts of the Agency in seeking reaccreditation 

under the Investors in People (IiP) programme; these efforts were rewarded in the autumn of 

2009 by the attainment of the IiP silver status. The Agency continues to seek to ensure that its staff have 

the best possible skills and training, and in furtherance of this aim an initial group of staff undertook training 

during the year for the Retirement Provision Certificate. Further numbers of staff also completed European 

Computer Driving Licence training, while we maintained a busy in-house technical training programme. A 

training database has been under development to ensure that we can plan effective and targeted training 

in the future. A further achievement was the attainment in April 2010 of the bronze award under the 

Healthy Working Lives programme, for which a small team had been working during the year. 

Towards the end of the financial year the Agency’s separate functions of technical training, development 

training, and quality assurance were merged into a single team within Corporate Services. 

Corporate Communications 

Having been established in the previous financial year, the Corporate Communications function has helped 

steer a number of important projects over the past year, including the annual stakeholder survey, and the 

staff survey, the results of both of which are used to inform aspects of our work in the following year. In 

addition, the team coordinates the production of the regular staff newsletter, and the fortnightly Core 

Briefing to staff. 

Finance 

The finance function comprises two teams, which deal with Agency Administration (running costs) and 

Operations (the pension schemes): 

Agency Administration Finance 

The Administration Finance team is responsible for all income and expenditure in relation to the Agency’s 

running costs. The team facilitates the preparation of the Agency’s annual budget and subsequent 

monitoring over the financial year. The team is responsible for the maintenance of the framework of 

internal financial controls. 

16


The team also ensures that the Agency Annual Report and Accounts are completed and laid before the 

Scottish Parliament within the statutory timescales and produces the Scottish Parliament Pension Scheme 

accounts. The team provides secretarial support to the Audit Committee and also prepares monthly and 

quarterly financial reports and forecasts to management. The team liaises with the Scottish Government 

Central Finance Department on financial monitoring, and provides information for budgeting exercises. The 

team plays an important part in monitoring performance against the Agency’s key targets. 

Operations Finance Team 

The Operations finance team administers the collection of income for the Scottish Teachers and NHS 

(Scotland) Pensions Schemes, supports the payroll section in making payments and recovering 

overpayments, and produces resource accounts for the two schemes. 

The team prepared income and expenditure budgets for the above schemes, which contributed to Scottish 

Government and HM Treasury spending plans. These figures are monitored and, where necessary, 

adjustments are made during the Spring and Autumn Budget Revisions. 

During the year the team worked to develop and implement a new system for the collection of scheme 

contributions that amount to £1.4 billion annually from 1200 employers. The system incorporates 

automated workflows and debt management processes, from which we will derive significant efficiency and 

operational gains within the Agency’s finance function. 

Facilities and Mailroom Management 

The purpose of the Facilities/Mailroom team is to provide a quality environment that supports the Agency’s 

objectives and cost effective and quality Business support mechanisms. 

We are committed to managing our premises in an environmentally friendly way, ensuring the safety of 

staff and visitors. 

Health and Safety continues to be a high management priority throughout the Agency, procedures are now 

well established and training is provided to ensure that all of our staff are aware of their responsibilities. 

Human Resources 

The primary responsibility of the Agency’s HR Team is to provide Directors, managers and staff with 

support and advice relating to all SG HR policies. It is recognised that the Agency’s HR function will 

change considerably in the near future, but we will continue to provide a professional support service to all 

our colleagues. 

The Agency’s staffing complement over the past 2 years was: 

Permanent staff complement 

Ave number of staff in post (FTE) 

17 

2009/10 2008/09 

238 

245 

Staff turnover for 2009-2010 was 7.6% (18.5 FTE members of staff). This figure includes: 

245 

232 

• 7 staff who left to work in other Departments of the Scottish Government or OGDs 

• 8 resignations from the SPPA and the Scottish Government; 

• 1 retirement; 

• 1 dismissal. 

• 2 career breaks

Recruitment 

The Agency recruited 13 FTE new members of staff during the year: 


• 3 staff transferred from SG centrally or other Government departments; 

• 10 were recruited following a Scottish Government local external advertising campaign. 

5 of the above external recruits joined the Agency on 12 month Fixed Term appointments. 

The Agency follows the Scottish Government Resourcing Policy and works closely with the SG’s Finance 

and Central Services Directorates to contribute to the FCSD workforce plan. 

Sick Absence Management 

The average total number of sick days per person was 10 days (2008-2009: 10 days), including those who 

were on long term sick leave. 

18

Annex A 


2009‐10 Scottish Statutory Instruments made for public service pensions schemes 

NHS 

• The National Health Service (Superannuation Scheme Pension Scheme and Injury Benefits) (Scotland) 

(No. 2) Amendment Regulations 2009 (SSI 2009/208) coming into force 26 June 2009 

• The National Health Service (Superannuation Scheme, Pension Scheme, Injury Benefits and Additional 

Voluntary Contributions) (Scotland) Amendment Regulations 2010 (SSI 2010/022) coming into force 26 

February 2010 

LGPS 

• The Local Government (Discretionary Payments and Injury Benefits) (Scotland) Amendment 

Regulations 2009 (SSI 2009/187) coming into force on 8th June 2009 and having effect from 1st April 

2009 

• The Local Government Pension Scheme Amendment (Increased Pension Entitlement) (Scotland) 

Regulations 2009 (SSI 2009/186) coming into force on 26 June 2009 

• The Local Government Pension Scheme Amendment (Scotland) Regulations 2009 (SSI 2009/93) 

coming into force 1 April 2009 

The Police Pension Scheme 

• The Police Pensions Amendment (Increased Pension Entitlement) (Scotland) Regulations 2009 (SSI 

2009/185) coming into force on 26 June 2009 

The Firefighters’ Pension Schemes 

• The Firefighters' Pension Scheme Amendment (Increased Pension Entitlement) (Scotland) Order 

2009 (SSI 2009/184) coming into force 26 June 2009 

19

Scottish Public Pensions Agency 


The Accountable Officer authorised these financial statements for issue on 3 rd August 

2010 

20

SCOTTISH PUBLIC PENSIONS AGENCY 

Annual Accounts 2009‐2010 

Management Commentary 

Accounts Direction 


These accounts have been prepared in accordance with the Accounts Direction given by the Scottish 

Ministers in accordance with section 19(4) of the Public Finance and Accountability (Scotland) Act 2000. 

History and Statutory Background 

The Scottish Public Pensions Agency (SPPA) was launched on 1 April 1993 as part of the Government’s 

Next Steps Initiative. Its operating framework, including financial delegations, is established in the Agency’s 

formal Framework Document. The Agency was known as The Scottish Office Pensions Agency (SOPA), 

before changing its name after the establishment of the Scottish Parliament on 1 July 1999. The Agency is 

headed by a Chief Executive who is directly accountable to the Scottish Ministers. 

Principal Activities 

The SPPA’s principal role is to administer the superannuation, injury benefit and compensation schemes 

for the NHS in Scotland, and for members of the Scottish Teachers Superannuation Scheme.. The Agency 

also provides a calculation service in respect of three smaller superannuation schemes: the Scottish Legal 

Aid Board Schemes, the Scottish Parliamentary Pension Scheme and the Northern Ireland Assembly 

Scheme. It also develops the regulations for these public service pension schemes for which Scottish 

Ministers have responsibility and advises the Scottish Government and Ministers on Scottish public sector 

pension policy issues. 

Review of the business 

The Agency is primarily funded by the Scottish Government. A small proportion of its income is selfgenerated 

from work associated with pension sharing on divorce and from the provision of pension 

calculation services to third parties. 

Position at the end of the Year 

The Agency’s Operating Cost Statement shows that net expenditure was £10.9 million in 2009-10, 

compared with £9.6 million in the previous financial year. A breakdown of expenditure is detailed in notes 2 

and 3. 

The Agency spent £1.9 million on non-current assets during the year. Further information on non-current 

assets is included in notes 5 and 6. 

21


22 

Allocation 

£m 

Out-turn 

£m 

Administration 

9.1 

9.4 

Less Notional Costs 

(0.3) 

Appropriations-in-aid 

Operating costs excl depreciation & cost of 

(0.1) (0.1) 

capital 9.0 9.0 

Depreciation 1.6 1.3 

Cost of capital 0.3 0.3 

Total operating costs 10.9 10.6 

Capital 2.1 1.9 

Indication of likely future developments 

2010-2011 will be a year of consolidation of some of its recent achievements in implementing new IT 

systems, including the pensions management system, and the contributions and debtor management 

system. In addition the Agency will: 

• seek to develop web-based systems to improve efficiency and stakeholder service levels; 

• design and implement a Leadership Development Programme, targeted at middle managers and 

designed to get the best out of our staff; 

• seek to identify efficiencies in our processes through a structured programme; 

• respond to the expected budgetary challenges that the Agency faces, along with the rest of the UK 

public sector; 

Risks and uncertainties 

The Agency maintains a corporate risk register which is reviewed and updated quarterly by the Senior 

Management Team and by the Audit committee. In addition, Directorates have risk registers for their own 

areas of business, which are discussed and reviewed with staff members as part of the business planning 

process, and the results taken into account in setting business objectives. 

In the course of 2009-10, the possibility of significant resource reductions in the future, emerged as one of 

the most significant risks to the Agency. Other key risks include mishandling of personal or sensitive data; 

and major IT failure. 

Performance against Key Performance Indicators 

The Agency’s aims, objectives and performance against key targets in 2009-10 are listed as a section in 

this Annual Report. The Agency’s Key Performance Targets are listed in the Corporate Plan which can be 

accessed from the SPPA website at www.sppa.gov.uk

Corporate Governance 


Effective Corporate Governance must be at the heart of any business if it is to succeed. One of the key 

features within the Agency is that Corporate Governance (including Internal Control and Risk Management) 

is regarded as a business, rather than a finance, issue. 

A good standard of Corporate Governance, and therefore, the effective efficient and economic running of 

the organisation, is ensured through the adherence to a number of underlying principles, which include: 

Integrity and accessibility of financial information; 

Auditor Independence; 

Management Responsibility; and 

Sound processes of internal control 

The Agency shares the Scottish Executive Accounting System (SEAS), and information from this system is 

available directly to the Scottish Government. 

The Agency has a clearly defined governance structure: 

The Senior Management Team (comprising the Executive Directors); 

The External Management Board (which includes Non-Executive Directors); 

The Audit Committee; 

Allocation of specified areas of responsibility to each Executive Director; 

Sound project management and project sponsorship disciplines; 

The on-going review of processes to ensure best practice. 

The operation of sound mechanisms for internal control is ensured through: 

Planning procedures to ensure that future work is aligned to Government policy 

and the Agency’s strategic direction; 

Clear capital investment control mechanisms; 

Sound project management and project sponsorship disciplines; 

Sound asset management processes including management of our property. 

The Agency operates a formal risk management procedure to ensure that all risks to our business are 

identified and receive focussed management attention at the appropriate level. The Agency’s Senior 

Management Team identifies and reports the key strategic risks to the External Management Board and 

Agency Audit Committee. These risks are linked to key objectives in the annual operating plan/corporate 

plan. 

The Agency’s Directors identify and evaluate risk when they prepare and monitor their directorate business 

plans. Project Managers ensure that risks are identified when preparing project plans. Risk is, therefore, a 

standard agenda item in many areas of the Agency. The Statement on Internal Control (below) contains 

further details of the framework of responsibility for risk management. 

The Directors 

The Agency’s management structure is detailed in the Leadership and Governance section of the Agency’s 

Annual Report. The directors and senior management of the Agency at 31 March 2010 were: 

Neville Mackay Chief Executive 

Ian Clapperton Operations Director 

Chad Dawtry Policy Director 

Pamela Brown IT Director 

Christopher Fenton Corporate Services Director 

Alyson Stafford Non-executive chair of the External Management Board 

(until 27 th July 2009) 

James Taylor Non-executive Director 

23


(until 27 th July 2009 when he succeeded Alyson Stafford as 

Non-executive chair) 

Alex Smith Non-executive Director 

Julia Edey Non-executive Director 

None of the directors held any company directorship or other significant interests which may have 

conflicted with their management responsibilities during the year. 

Audit Committee 

The SPPA’s Audit Committee supports the Accountable Officer in monitoring and reviewing corporate 

governance including risk and control systems within the Agency. Membership comprises non-executive 

external members to ensure that the committee remains objective. The Chairman of the Audit Committee 

is also a Non Executive member of the Management Board. Independent members during 2009-10 were: 

• Alex Smith (Chairman) 

• Julia Edey 

• James Taylor 

Employment policies 

Health, Safety and the Environment 

The Agency aims to provide a safe and healthy working environment for all staff and, so far as is 

reasonably practicable, have systems and procedures in place which will ensure that all equipment, plant 

and premises are safe and free from adverse effects to health. We apply the Scottish Government’s Health 

and Safety Management Systems and procedures and we have a Health and Safety Committee, as well as 

trained Health and Safety Liaison Officers to provide support services and advice to staff. We work in 

partnership with Trade Union representatives to address any safety issues and help to encourage a proactive 

safety culture. 

The Agency is committed to improving environmental performance as part of our wider commitment to 

sustainable development. We recognise our legal and ethical responsibilities to protect and enhance the 

environment and are working towards sustainable practices in the use and disposal of materials, energy, 

and transport and landscape management. The Agency has published an environmental policy and is 

working with a group of environmental guardians to develop our own environmental management system. 

Further detail about the Agency’s commitment to the environment can be found in the Corporate Social 

Responsibility section of the Annual Report. 

Employee Recruitment 

Recruitment and promotion campaigns undertaken by the Agency were carried out on the basis of fair and 

open competition, selection on merit and in accordance with Scottish Government guidance. Details of 

recruitment in 2008-2009 and 2009-2010 were as follows: 

Pay Band Number of Posts Male Female 

2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 

Up to £17,286 11 16 6 6 5 10 

£20,004 - £24,671 7 8 3 4 4 4 

£24,171 - £29,091 5 5 0 4 5 1 

£29,673 - £39,385 1 4 1 1 0 3 

Total 24 33 10 15 14 18 

% 100 100 42 45 58 55 

24

Employees with disabilities 


The Agency complies with the Scottish Government Civil Service Code of Practice on the employment of 

people with disabilities and is an Employment Services disability symbol user. This aims to ensure that 

there is no discrimination on the grounds of disability and that access to employment and career 

advancement with the Agency is based solely on ability, qualifications and suitability for the work. 

Equal opportunities 

The Agency is an equal opportunities employer. Policies are in place to guard against discrimination and 

aim to ensure that there are no unfair or illegal discriminatory barriers to employment or advancement in 

the Agency. 

The Agency is entirely comfortable with the legal requirement to promote race equality as set out in the 

Race Relations Act (as amended). As an Agency of the Scottish Government, we fully subscribe to the 

Government’s Race Equality Scheme and we continue to develop structures and systems to ensure that 

equality becomes an integral part of our thinking and behaviour. 

Employee consultation 

The Agency recognises the importance of good industrial relations and is committed to effective employee 

communications, which it maintains through staff notices, the staff newsletter and regular staff briefing 

sessions. The quarterly Partnership meetings provide the means for representatives of staff and 

management to discuss matters of concern or mutual interest. It has delegated detailed consideration of 

partnership issues to an Industrial and Employee Relations Group. 

Other disclosures 

Auditors 

The accounts are audited by Audit Scotland. A detail of the Audit Scotland notional fee is shown at Note 3. 

Audit Scotland has provided only audit services to the SPPA during the year. Internal audit services are 

provided by the Scottish Government internal audit department; the scope of work is determined following 

discussion with management and is subject to approval by the Audit committee. 

Disclosure of relevant audit information 

As Accountable Officer, I am not aware of any relevant audit information of which our auditors are unaware. 

I have taken all necessary steps to ensure that I am aware of any relevant audit information and to 

establish that the auditors are also aware of this information. 

Significant changes in non-current assets 

The movements in non-current assets are set out in notes 5 and 6 to the financial statements. There is no 

significant difference between the value of the non-current assets shown in the financial statements and 

their current market value. 

Important events occurring after the year end 

There were no material events occurring after the year end which had a bearing on the accounts. 

25

Supplier payment policy 


The SPPA follows the Scottish Government supplier payment guidelines and ensures that all invoices not 

in dispute are settled within 10 days. The Agency processes invoices on the Scottish Government’s 

Accounting System (SEAS). For the year, the Agency processed 99.4% (93.04% 2008-09) of all invoices 

within the 10 day period. 

Charitable donations 

There were no charitable donations. 



3 rd August 2010 

26

Remuneration Report 

Remuneration policy 

Service contracts 


Civil service appointments are made in accordance with the Civil Service Commissioners’ Recruitment 

Code, which requires appointment to be on merit on the basis of fair and open competition but also 

includes the circumstances when appointments may otherwise be made. 

Unless otherwise stated below, the officials covered by this report hold appointments which are openended. 

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 Commissioners can be found at 

www.civilservicecommissioners.gov.uk. 

Non-executive Directors 

Non-executive directors during the whole of 2009-10 were James Taylor (chair), Alex Smith, Julia Edey and 

Alyson Stafford. 

The non-executive directors are not salaried in their capacity of non-executive directors. Alex Smith 

received £3,311, James Taylor received £4,405 and Julia Edey received £2,230 in fees and expenses in 

line with their duties. Alyson Stafford received neither fees nor expenses during 2009-2010. 

Senior Management Team 

The senior management team in 2009-10 comprised Neville Mackay (Chief Executive), Ian Clapperton, 

Pam Brown, Chad Dawtry and Chris Fenton. All served for the whole year. 

27

Salaries 

Names and Title 



Pamela Brown 

Director of IT 


Director of Operations 

Chris Fenton 

Director Corporate Services 

Chad Dawtry 

Director of Policy 

Salary 

Salary 

3. 

£000 

5. 

80-85 


2009-2010 

1. 

28 

Benefits in 

kind 

£000 

6. 

Nil 

Salary 

4. 

£000 

7. 

75-80 

2. 

2008-2009 

Benefits in 

kind 

£000 

8. 

Nil 

9. 

55-60 Nil 50-55 Nil 

50-55 Nil 45-50 Nil 

55-60 Nil 50-55 Nil 

50-55 Nil 45-50 Nil 

SPPA does not have a separate performance pay scheme for senior managers, but applies the Scottish 

Government-wide remuneration policy equally to all staff including senior management. All staff members 

are assessed annually on their performance against agreed objectives; staff members whose 

performance is considered exceptional are entitled to a performance bonus. In the case of staff other 

than Neville Mackay, this ranges from £750 to £1,500. Salary includes gross salary; performance pay or 

bonuses; overtime; recruitment and retention allowances; private office allowances and any other 

allowance to the extent that it is subject to UK taxation. This presentation is based on payments made by 

the Agency and thus recorded in these accounts. 

Benefits in kind 

The monetary value of benefits in kind covers any benefits provided by the employer and treated by Her 

Majesty’s Revenue and Customs as a taxable emolument. In 2009-2010 this value was £nil (2008-2009: 

£nil). 

Compensation 

SPPA made no compensation payments to any of the Senior Management Team.

Pension Benefits 

Names and Title Real 

increase in 

pension 

and lump 

sum at 

pension 

age 



(current employment) 


(previous 

employment) 

Pamela Brown 

Director of IT 


Director of Operations 

Chris Fenton 

Director Corporate 

Services 

Chad Dawtry 

Director of Policy 

Total 

accrued 

pension 

at 

pension 

age as at 

31/3/10 

and 

related 

lump 

sum 


29 

CETV at 

31/3/10 

CETV at 

31/03/09* 

Real 

increase/ 

decrease 

in CETV 

£000 £000 £000 £000 £000 

0-2.5 and 

0-2.5 for 

lump sum 

0-2.5 and 

2.5-5 for 

lump sum 

0-2.5 and 

5-7.5 for 

lump sum 

2.5-5 and 

7.5-10 for 

lump sum 

0-2.5 and 

5-7.5for 

lump sum 

0-2.5 and 

2.5-5 for 

lump sum 

5-10 plus 

0-5 lump 

sum 

20-25 

plus 

60-65 

lump sum 

20-25 

plus 65- 

70 lump 

sum 

20-25 

plus 70- 

75 lump 

sum 

15-20 

plus 45- 

50 lump 

sum 

5-10 plus 

20-25 

lump sum 

156 121 24 

394 352 19 

384 329 33 

534 448 58 

338 278 37 

141 114 18 

*The figure may be different from the closing figure in last year’s accounts. This is due to the CETV factors being 

updated to comply with The Operational Pension Schemes (Transfer Values) (Amendment) Regulations 2008. There 

are many reasons that could cause a decrease in the real increase in CETV including: 

i. If a rise in pensionable salary is less than the rate of inflation; 

ii. If someone joined or left mid year; 

iii.The pension factors for the over 60s decrease the value of the pension that could have been taken at 

60. 

All information in the tables above has been subject to audit.

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 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 as a consequence of their total 

membership of the pension scheme, not just their service in a senior capacity to which disclosure 

applies. The figures include the value of any pension benefit in another scheme or arrangement 

which the individual has transferred to the Civil Service pension arrangements. They also include 

any additional pension benefit accrued to the member as a result of their purchasing additional 

pension benefits at their own cost. CETVs are calculated in accordance with The Occupational 

Pension Schemes (Transfer Values) (Amendment) Regulations 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 reflects the increase in CETV effectively funded by the employer. It does not include the 

increase in accrued pension due to inflation, and 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. 

Civil Service Pensions 

Pension benefits are provided through the Civil Service pension arrangements. From 30 July 

2007, civil servants may be in one of four defined benefit schemes; either a “final salary” scheme 

(classic, premium, or classic plus); or a “whole career” scheme (nuvos). These statutory 

arrangements are unfunded with the cost of benefits met by monies voted by parliament each 

year. Pensions payable under classic, premium, classic plus and nuvos are increased 

annually in line with changes in the Retail Prices Index (RPI). Members who joined from October 

2002 could opt for either the appropriate defined benefit arrangement or a good quality “money 

purchase” stakeholder pension with a significant employer contribution (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 

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. 

Classic Plus is essentially a hybrid with benefits for service before 1 October 2002 calculated 

broadly as per classic and benefits for service from October 2002 worked out as in premium. In 

nuvos a member builds up a pension based on his pensionable earnings during their period of 

scheme membership. At the end of the scheme year (31 March) the member’s earned pension 

account is credited with 2.3% of their pensionable earnings in that scheme year and, immediately 

after the scheme year end, the accrued pension is uprated in line with RPI. In all cases members 

may opt to give up (commute) pension for lump sum up to the limits set by the Finance Act 2004. 

30


The Partnership pension account is a stakeholder pension arrangement. The employer makes a 

basic contribution of between 3% and 12.5% (depending on the age of the member) into a 

stakeholder pension product chosen by the employee from a panel of three providers. 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). 

The accrued pension quoted is the pension the member is entitled to receive when they reach 

pension age, or immediately on ceasing to be an active member of the scheme if they are already 

at or over pension age. Pension age is 60 for members of classic, premium and classic plus 

and 65 for members of nuvos. 

Further details about the Civil Service pension arrangements can be found at the website: 

www.civilservice-pensions.gov.uk 




31


Statement of Agency’s and Chief Executive’s 

Responsibilities 

Under section 19 of the Public Finance and Accountability (Scotland) Act 2000 the Scottish 

Ministers have directed the Scottish Public Pensions Agency to prepare a statement of accounts 

for each financial year in conformity with the accounts direction on page 58 of these financial 

statements, detailing the resources required, held or disposed of during the year and the use of 

resources by the Agency during the year. 

The accounts are prepared on an accruals basis and must give a true and fair view of the 

Agency’s state of affairs at the year end and of its operating costs, recognised gains and losses, 

and cash flows for the financial year. 

The Principal Accountable Officer of the Scottish Government appointed the Chief Executive of 

the Scottish Public Pensions Agency as the Accountable Officer for the Agency. As Accountable 

Officer, the Chief Executive is responsible to the Scottish Ministers. 

In preparing the accounts, the Accountable Officer is required to comply with the Government 

Financial Reporting Manual, and in particular to: 

• observe the accounts direction issued by the Scottish Ministers, including the relevant 

accounting and disclosure requirements, and apply suitable accounting policies on a 

consistent basis; 

• make judgements and estimates on a reasonable basis; 

• state whether applicable accounting standards, as set out in the Government Financial 

Reporting Manual, have been followed, and disclose and explain any material departures 

in the financial statements and 

• prepare the financial statements on a “going concern” basis, unless it is inappropriate to 

presume that the Agency will continue in operation. 

The responsibilities of the Accountable Officer, including responsibility for the propriety and 

regularity of the public finances for which the Accountable Officer is answerable, for keeping 

proper records and for safeguarding the Agency’s assets, are set out in the Memorandum to 

Accountable Officers from the Principal Accountable Officer. 




32

STATEMENT ON INTERNAL CONTROL 

Scope of Responsibility 


As Accountable Officer, I have responsibility for maintaining a sound system of internal control 

that supports the achievement of the Agency’s policies, aims and objectives, set by Scottish 

Ministers, whilst safeguarding the public funds and assets for which I am personally responsible, 

in accordance with the responsibilities assigned to me. 

As Accountable Officer, I am personally answerable to Scottish Parliament in accordance with 

section 15 of the Public Finance and Accountability (Scotland) Act 2000. I am responsible for the 

propriety and regularity of financial transactions under my control and for the economic, efficient 

and effective use of resources provided to the Agency, for ensuring that arrangements have been 

made to secure best value and for signing the Agency’s annual accounts. I am also responsible 

for providing the necessary assurances to the Principal Accountable Officer to enable him to sign 

the Statement on Internal Control contained within the Scottish Government Consolidated 

Accounts. I have responsibility for ensuring that effective management systems are in place 

within the Agency and that all risks are identified, assessed and managed appropriately. 

The Scottish Public Finance Manual (SPFM) is issued by the Scottish Ministers to provide 

guidance to the Scottish Government and other relevant bodies on the proper handling and 

reporting of public funds. It sets out the relevant statutory, parliamentary and administrative 

requirements, emphasises the need for economy, efficiency and effectiveness, and promotes 

good practice and high standards of propriety. 

The SPPA is an Executive Agency of the Scottish Government. Our aim is to deliver a high 

quality, customer-focussed and cost-effective service to our customers and stakeholders. Our 

core values are to: 

• put our customers first; 

• support our staff so that they are empowered to achieve and deliver excellence; and 

• maintain the highest standards of probity and governance whilst using our resources 

efficiently and effectively. 

Purpose of the System of Internal Control 

The system of internal control is designed to manage risk to a reasonable level rather than 

eliminate all risk of failure to achieve the organisation’s policies, aims and objectives. It can 

therefore only provide reasonable and not absolute assurance of effectiveness. 

The system of internal control is based on an ongoing process designed to identify the principal 

risks to the achievement of the organisation’s policies, aims and objectives and to evaluate the 

nature and extent of those risks and to manage them efficiently, effectively and economically. The 

process within the organisation accords with the SPFM and has been in place for the year ended 

31 March 2010 and up to the date of approval of the annual report and accounts and accords with 

guidance from the Scottish Ministers. 

33

Capacity to handle risk 


The SPPA has taken an approach to risk management that it considers is appropriate to its role 

and remit. 

Risk management is the responsibility of every member of staff not just those that administer the 

risk register. All staff members are involved in assessing the Agency’s risks when developing the 

forward Business Plans as part of the yearly planning process. The resources available to 

manage risk are finite and the aim must therefore be to achieve an optimum response to risk, 

based on the prioritisation of the risks that the agency faces. The regular review of risks at Senior 

Management level and the day to day management of risks by those directly involved aims to 

ensure that the correct balance is maintained between risk and control. 

Risk and Control Framework 

All bodies subject to the requirements of the SPFM must operate a risk management strategy in 

accordance with relevant guidance issued by the Scottish Ministers. The general principles for a 

successful risk management strategy are set out in the SPFM. 

All members of the senior management team have attended training on risk awareness, and the 

Agency’s Management Board has identified the top-level risks and consolidated these into a risk 

register together with a determination of a control strategy for each risk. Risk management is 

incorporated into the business planning and decision making processes of the organisation and is 

embedded within our operations, rather than being treated as a separate exercise. Data security, 

and the possibility of loss of sensitive or personal data, is considered a corporate risk. The 

specific risks to data security posed by threats to physical security, inappropriate communications 

media, or lack of IT security, are considered during the regular reviews of corporate risks, by 

senior management and by the Audit Committee. As part of the Agency’s awareness campaign, 

all members of staff as at 31 July 2009 successfully completed the Cabinet Office’s level 1 data 

security e-learning package. 

In order to ensure that the Agency is able to respond to changing risks from within and outside 

the organisation, the Agency’s Management Board and Audit Committee have ensured that risk 

management and internal control are considered on a regular basis at their meetings. The Audit 

Committee receives regular reports from internal audit and Audit Scotland concerning internal 

control issues and recommendations, and is notified of actions to be taken to address any issues 

or weaknesses identified. The Audit Committee also considers the adequacy of arrangements for 

the assessment and management of risk, and adequacy of arrangements for corporate 

governance. 

More generally, the organisation is committed to a process of continuous development and 

improvement, developing systems in response to any relevant reviews and developments in best 

practice in this area. In particular, in the period covering the year to 31 March 2010 and up to the 

date of approval of the annual accounts the organisation has: 

• set stretching performance targets, including making savings under the Efficient 

Government Initiative, which cover the main areas of activity and are regularly monitored; 

• monitored expenditure against budget on both a monthly and quarterly basis; 

• implemented a new IT system to administer the new pension schemes for the NHS in 

Scotland; 

• operated a system of delegated budgetary control; 

• introduced new financial software to manage employers’ pension contributions, and 

recover debt; and 

34


• reported to the Audit Committee on the progress made in implementing the 

recommendations of internal and external audit. 

Review of overall effectiveness of controls 

As Accountable Officer, I have responsibility for reviewing the effectiveness of the systems of 

internal control. My review is informed by the: 

• managers within the Agency who have the responsibility for the development and 

maintenance of the internal control framework; 

• work of the Scottish Government’s Internal Audit team who regularly submit reports to the 

Audit Committee which includes the Head of Internal Audit’s independent and objective 

opinion on the adequacy and effectiveness of the Agency’s systems of internal control 

together with recommendations for improvement; 

• Audit Committee overseeing the work of Internal Audit; and 

• comments made by the external auditors in their management letters and other reports. 

Appropriate action is in place to address any weaknesses identified and to ensure the continuous 

improvement of the system. 

The Agency uses and relies on the core financial management systems of the Scottish 

Government to carry out its own accounting and payment functions. I have received assurances 

from the Scottish Government that reliance can be placed on the central systems they provide. 

While these accounts only relate to Direct Running Costs, the Agency also has a financial 

responsibility for the administration of various pension schemes. Separate Statements on Internal 

Control will be included in the accounts for the National Health Service (Scotland) and Scottish 

Teachers Pension Schemes. 




35


Independent auditor’s report to the Scottish Public 

Pensions Agency, the Auditor General for Scotland and 

the Scottish Parliament 

I have audited the financial statements of the Scottish Public Pensions Agency for the year ended 

31 March 2010 under the Public Finance and Accountability (Scotland) Act 2000. These comprise 

the Operating Cost Statement, the Statement of Financial Position, the Statement of Cash Flows, 

the Statement of Changes in Taxpayer’ Equity and the related notes. These financial statements 

have been prepared under the accounting policies set out within them. I have also audited the 

information in the Remuneration Report that is described in that report as having been audited. 

This report is made solely to the parties to whom it is addressed in accordance with the Public 

Finance and Accountability (Scotland) Act 2000 and for no other purpose. In accordance with 

paragraph 123 of the Code of Audit Practice approved by the Auditor General for Scotland, I do 

not undertake to have responsibilities to members or officers, in their individual capacities, or to 

third parties. 

Respective responsibilities of the Agency, Chief Executive and auditor 

The Agency and Chief Executive are responsible for preparing the Annual Report, which includes 

the Remuneration Report, and the financial statements in accordance with the Public Finance 

and Accountability (Scotland) Act 2000 and directions made thereunder by the Scottish Ministers. 

The Chief Executive is also responsible for ensuring the regularity of expenditure and receipts. 

These responsibilities are set out in the Statement of Agency’s and Chief Executive’s 

Responsibilities. 

My responsibility is to audit the financial statements and the part of the Remuneration Report to 

be audited in accordance with relevant legal and regulatory requirements and with International 

Standards on Auditing (UK and Ireland) as required by the Code of Audit Practice approved by 

the Auditor General for Scotland. 

I report to you my opinion as to whether the financial statements give a true and fair view and 

whether the financial statements and the part of the Remuneration Report to be audited have 

been properly prepared in accordance with the Public Finance and Accountability (Scotland) Act 

2000 and directions made thereunder by the Scottish Ministers. I report to you whether, in my 

opinion, the information which comprises only the Management Commentary is consistent with 

the financial statements. I also report whether in all material respects 

• the expenditure and receipts shown in the financial statements were incurred or applied in 

accordance with any applicable enactments and guidance issued by the Scottish Ministers, 

the Budget (Scotland) Act covering the financial year and sections 4 to 7 of the Public 

Finance and Accountability (Scotland) Act 2000; and 

• the sums paid out of the Scottish Consolidated Fund for the purpose of meeting the 

expenditure shown in the financial statements were applied in accordance with section 65 of 

the Scotland Act 1998. 

In addition, I report to you, if in my opinion, the Agency has not kept proper accounting records, if 

I have not received all the information and explanations I require for my audit, or if information 

specified by relevant authorities regarding remuneration and other transactions is not disclosed. 

36


I review whether the Statement on Internal Control reflects the Agency’s compliance with Scottish 

Government guidance and I report if, in my opinion, it does not. I am not required to consider 

whether this statement covers all risks and controls or to form an opinion on the effectiveness of 

the Agency’s corporate governance procedures or its risk and control procedures. 

I read the other information contained in the Annual Report and Accounts and consider whether it 

is consistent with the audited financial statements. This other information comprises only the 

Annual Report and the unaudited part of the Remuneration Report. I consider the implications for 

my report if I become aware of any apparent misstatements or material inconsistencies with the 

financial statements. My responsibilities do not extend to any other information. 

Basis of audit opinion 

I conducted my audit in accordance with the Public Finance and Accountability (Scotland) Act 

2000 and International Standards on Auditing (UK and Ireland) issued by the Auditing Practices 

Board as required by the Code of Audit Practice approved by the Auditor General for Scotland. 

My audit includes examination, on a test basis, of evidence relevant to the amounts, disclosures 

and regularity of expenditure and receipts included in the financial statements and the part of the 

Remuneration Report to be audited. It also includes an assessment of the significant estimates 

and judgements made by the Agency and Chief Executive in the preparation of the financial 

statements, and of whether the accounting policies are most appropriate to the agency’s 

circumstances, consistently applied and adequately disclosed. 

I planned and performed my audit so as to obtain all the information and explanations which I 

considered necessary in order to provide me with sufficient evidence to give reasonable 

assurance that the financial statements and the part of the Remuneration Report to be audited 

are free from material misstatement, whether caused by fraud or error, and that in all material 

respects the expenditure and receipts shown in the financial statements were incurred or applied 

in accordance with any applicable enactments and guidance issued by the Scottish Ministers. In 

forming my opinion I also evaluated the overall adequacy of the presentation of information in the 

financial statements and the part of the Remuneration Report to be audited. 

Opinion 

Financial statements 

In my opinion 

• the financial statements give a true and fair view, in accordance with Public Finance and 

Accountability (Scotland) Act 2000 and directions made thereunder by the Scottish Ministers, 

of the state of affairs of the Scottish Public Pensions Agency as at 31 March 2010 and of the 

net operating cost, changes in taxpayers’ equity and cash flows for the year then ended; 

• the financial statements and the part of the Remuneration Report to be audited have been 

properly prepared in accordance with the Public Finance and Accountability (Scotland) Act 

2000 and directions made thereunder by the Scottish Ministers; and 

• information which comprises only the Management Commentary in the Annual Report and 

Accounts is consistent with the financial statements. 

37

Regularity 

In my opinion in all material respects 


• the expenditure and receipts shown in the financial statements were incurred or applied in 

accordance with any applicable enactments and guidance issued by the Scottish Ministers, 

the Budget (Scotland) Act covering the financial year and sections 4 to 7 of the Public 

Finance and Accountability (Scotland) Act 2000; and 

• the sums paid out of the Scottish Consolidated Fund for the purpose of meeting the 

expenditure shown in the financial statements were applied in accordance with section 65 of 

the Scotland Act 1998. 

W Convery, CPFA 

Audit Scotland 

Osborne House 

1/5 Osborne Terrace 

Edinburgh 

EH12 5HG 

13 th August 2010 

38


OPERATING COST STATEMENT 


for the year ended 31 March 2010 31Mar10 31Mar09 

Note £000 £000 

Staff costs 2 6,378 5,522 

Other admin costs 3 3,041 3,140 

Depreciation 5,6 1,302 817 

Operating income 4 (118) (121) 

Net Operating Costs before Cost of Capital 10,603 9,358 

Capital Charges 250 208 

Net Operating Costs for the Year 10,853 9,566 

The above results relate to continuing activities. 

The notes on pages 43 to 57 form part of these financial statements. 

39


STATEMENT OF FINANCIAL POSITION 


As at 31 March 2010 31Mar10 31Mar09 01Apr08 

Note £000 £000 £000 

Non-current assets 

Tangible non current assets 5 587 648 776 

Intangible assets 6 7,153 6,468 4,193 

Total non current assets 7,740 7,116 4,969 

Current assets 

Trade and other receivables 7 372 281 247 

Total current assets 372 281 247 

Total assets 8,112 7,397 5,216 

Current liabilities 

Trade and other payables


STATEMENT OF CASH FLOWS 


for the year ended 31 March 2010 Note 31Mar10 31Mar09 

£000 £000 

Cash flows from operating activities 

Net operating cost (10,853) (9,566) 

Adjustments for non cash transactions 

depreciation 1,302 817 

audit fee 3.3 265 252 

cost of capital 250 208 

Movements in working capital 

(Increase)/Decrease in trade and other 

receivables 7 (91) (34) 

Increase/(Decrease) in trade and other payables 8 268 (240) 

Movements in provisions 9 (32) (22) 

Net cash outflow from operating activities (8,891) (8,585) 

Cash flows from investing activities 

Purchase of tangible non-current assets 5 (72) (27) 

Purchase of intangible assets 6 (1,849) (2,933) 

Net cash flow from investing activities (1,921) (2,960) 

Cash flows from financing activities 

Net Funding 10,812 11,545 

The notes on pages 43 to 57 form part of these financial statements. 

41


Statement of Changes in Taxpayers' Equity 

for the year ended 31 March 2010 


42 

Note 

General Revaluation Total 

Fund Reserve Reserves 

£000 £000 £000 

Balance at 31 March 2009 6,623 72 6,695 

Unallocated Receipts (4) 0 (4) 

Net gain/(loss) on revaluation of tangible 

non-current assets 0 5 5 

Non cash charges - cost of capital 250 0 250 

Non cash charges - auditor's remuneration 3.3 265 0 265 

Transfers between reserves 48 (48) 0 

Net operating cost for the year (10,853) 0 (10,853) 

Net funding 10,812 0 10,812 


Note: The General Fund has been corrected to report Unallocated Receipts (£3,545) within 

creditors for the year ended 31 March 2010. 

The notes on pages 43 to 57 form part of these financial statements.


Statement of Changes in Taxpayers' Equity 

for the year ended 31 March 2009 


Note 

43 

General Revaluation Total 

Fund Reserve Reserves 

£000 £000 £000 


Changes in accounting policy (209) 0 (209) 

Restated balance at 1 April 2008 4,150 102 4,252 

Net gain/(loss) on revaluation of 

tangible non-current assets 0 3 3 

Non cash charges - cost of capital 208 0 208 

Non cash charges - auditor's remuneration 3.3 253 0 253 

Transfers between reserves 33 (33) 0 

Net operating cost for the year (9,566) 0 (9,566) 

Net funding 11,545 0 11,545 


The notes on pages 43 to 57 form part of these financial statements.


NOTES TO THE ACCOUNTS 

For the year ended 31 March 2010 

1 Statement of Accounting Policies 


These financial statements have been prepared in accordance with the Government Financial 

Reporting Manual (FReM) issued by the Scottish Government. The accounting policies contained 

in the FReM apply International Financial Reporting Standards (IFRS) as adapted or interpreted 

for the public sector context. Where the FReM permits a choice of accounting policy, the 

accounting policy which is judged to be most appropriate to the particular circumstances of the 

Agency for the purpose of giving a true and fair view has been selected. The particular policies 

adopted by the Agency are described below. They have been applied consistently in dealing with 

items that are considered material to the accounts. 

This is the first year that the Agency has prepared its financial statements under IFRS as 

modified by the FReM; the comparatives have been restated from UK Generally Accepted 

Practice (UK GAAP) to comply with IFRS as modified by the FReM. The effective date of 

transition is 1 April 2007. 

1.1 Accounting convention 

These accounts have been prepared under the historical cost convention modified to account for 

the revaluation of property, plant and equipment, intangible assets and inventories by reference 

to their current costs. 

1.2 Tangible non-current assets 

Assets previously described as tangible, which meet the recognition criteria of an intangible fixed 

asset as per IAS 38, have been reclassified as intangible. 

The Agency does not own any land or buildings but has included leasehold improvements in the 

Statement of Financial Position. 

Leasehold Improvements have been stated at market value for existing use using appropriate 

indices. Depreciated historic cost has been used as a proxy for the fair value of furniture and 

fittings and plant and machinery. All of the assets in these categories have (1) low values and 

short useful economic lives which realistically reflect the life of the asset and (2) a depreciation 

charge which provides a realistic reflection of consumption. ICT systems are stated at historical 

cost. The minimum level for capitalisation of a property, plant and equipment asset is £1,000. 

Property, Plant and Equipment assets were re-valued on the basis of indices at 31 March 2010. 

1.3 Depreciation 

Depreciation is provided on tangible non-current assets from the year they are brought into 

service. Rates are calculated to write off the acquisition cost less estimated residual value, evenly 

over expected useful lives as follows: 

44

Leasehold improvements - 10 to 20 years 

Furniture and Fittings - 10 years 

Plant and Machinery - 5 to 10 years 

ICT Systems - 3 to 7 years 

1.4 Intangible non-current assets 


Assets have been recognised as intangible non-current assets as per IAS 38. 

Purchased computer software and software licences are capitalised as intangible non-current 

assets where expenditure of £1,000 or more is incurred. Software and software licences are 

amortised over the shorter of the term of the licence and the useful economic life. Software and 

software licences are amortised over 36 months. The exception is capital expenditure on the 

Pension Change Project which is amortised over 84 months. 

Development expenditure is the capitalised costs of IT systems being developed but not yet 

brought into use. 

1.5 Financial instruments 

All Financial Assets held by the Scottish Public Pensions Agency have been classified as trade 

and other receivables and prepayments measured at amortised cost, using the effective interest 

method. 

As the cash requirements of the Scottish Public Pensions Agency are met through the Scottish 

Government, Financial Instruments play a more limited role in creating and managing risk than 

would apply to a non-public sector body. The majority of financial instruments relate to contracts 

to buy non-financial items in line with the Agency's expected purchase and usage requirement; 

the Agency is therefore exposed to little credit, liquidity or market risk. 

1.6 Capital charge 

A charge reflecting the cost of capital utilised by the Agency is included in the Operating Cost 

Statement. The charge is calculated on the average carrying amount of all assets less liabilities at 

the rate set by HM Treasury of 3.5% per annum (2008-2009: 3.5% per annum). 

1.7 Pensions 

Past and present employees are covered by the provisions of the Principal Civil Service Pension 

Scheme (PCSPS) which is a defined benefit scheme and is unfunded and non-contributory. The 

Agency recognises the expected cost of providing pensions on a systematic and rational basis 

over the period during which it benefits from employees services by payment to the PCSPS of 

amounts calculated on an accruing basis (further disclosures are included in Note 2). Liability for 

payment of future benefits is a charge on the PCSPS. Separate scheme statements are 

published for the PCSPS as a whole. 

1.8 Value Added Tax 

The Agency receives funding from the Scottish Government Finance and Sustainable Growth 

Budget to meet expenditure incurred, inclusive of VAT. However in order to comply with 

Government Accounting Regulations and normal commercial practice, operating costs are stated 

net of VAT where VAT is recoverable by the Agency. 

45


The Agency is registered for VAT as part of The Scottish Government, which is responsible for 

recovering VAT from HM Revenue and Customs on behalf of the Agency. 

1.9 Leases 

Operating lease rentals are charged to the operating cost statement on a straight-line basis over 

the term of the leases. 

2 Staff Numbers and Costs 

31Mar10 31Mar09 

Administration costs £000 £000 

Wages and Salaries 5,051 4,452 

Social Security Costs 326 285 

Other pension costs 852 772 

Agency staff costs 149 13 

Total administration staff costs 6,378 5,522 

Average number of whole-time 

equivalent persons employed 31Mar10 31Mar09 

Senior Management 5 5 

Other permanent staff 240 227 

Agency Staff 2 0 

247 232 

Wages and Salaries include employee benefits (flexitime balances and holiday entitlement owed 

to staff at year end) as per IAS 19. For 2009-2010, accrued employee benefits were £212,577 

(2008-09, £224,811). 

Costs for seven permanent members of staff working on the Pension Change Project were 

capitalised during the year. The total was £96,681 (2008-09, £171,118). 

The Principal Civil Service Pension Scheme (PCSPS) is an unfunded multi-employer defined 

benefit scheme. The Scottish Public Pensions Agency 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 2009-10, employers’ contributions of £851,958 were payable to the PCSPS (2008-09, 

£772,131) at rates in the range of 16.7 to 25.8 per cent (2008-09: 17.1 to 25.5 per cent) of 

pensionable pay, based on salary bands. The scheme’s Actuary reviews employer contributions 

every 4 years following a full scheme valuation. The contribution rates are set to meet the cost of 

the benefits accruing during 2009-10 to be paid when a member retires, and not the benefits paid 

during this period to existing pensioners. 

Employees can opt to open a partnership pension account, a stakeholder pension with an 

employer contribution. Employer contributions are age-related and range from 3.0% to 12.5% of 

46


pensionable pay. Employers also match employee contributions up to 3.0% of pensionable pay. 

Contributions paid by the Agency in 2009-10 were £nil (2008-09 – £nil). 

Employees joining after 1 October 2002 could opt to open a partnership pension account, a 

stakeholder pension with an employer contribution. No one from the Agency opted to join this 

scheme. 

3 Other Administration Costs 

3.1 General Administration Expenses 31Mar10 31Mar09 

£000 £000 

Actuarial Services 284 200 

Compensation payments 2 2 

Medical Services 106 167 

Travel and Subsistence 48 50 

Consultancy 0 76 

Printing and Copying 113 161 

Telephone Charges 24 24 

Training 145 117 

Stationery 51 50 

Office Machinery 17 44 

IT Maintenance 786 592 

Financial & Legal Services 24 100 

Postage Costs 241 310 

Call Centre Costs 34 25 

Recruitment & Advertising 5 57 

Other Minor Running Costs 54 40 

1,934 2,015 

3.2 Accommodation and Support Services 

Rent payable under operating lease 531 536 

Rates 97 82 

Maintenance 85 118 

Other accommodation costs 129 136 

842 872 

3.3 Notional Charges 

Services provided by The Scottish Government 87 78 

Audit Fee 178 175 

265 253 

Other Administration Costs Total 3,041 3,140 

3.4 Capital Charges 250 208 

47


4 Income 31Mar10 31Mar09 

£000 £000 

Administration income (118) (121) 

(118) (121) 

Operating income represents mainly charges for providing work in relation to pension sharing on 

divorce. 

5 Tangible Non-Current Assets 

Information 

Furniture 

& 

For the year ended 31 March 2010 Buildings Technology Equipment Fittings Total 

Cost or valuation 

£000 £000 £000 £000 £000 

At 1 April 2009 415 999 323 509 2,246 

Additions 0 72 0 0 72 

Disposals 0 (86) 0 0 (86) 

Revaluations 8 0 0 0 8 

At 31 March 2010 423 985 323 509 2,240 

Depreciation 

At 1 April 2009 132 916 209 341 1,598 

Charged in year 23 87 34 46 190 

Disposals 0 (86) 0 0 (86) 

Reclassifications 0 (52) 0 0 (52) 


At 31 March 2010 158 865 243 387 1,653 

NBV at 31 March 2010 265 120 80 122 587 

NBV at 31 March 2009 283 83 114 168 648 

48


Information 

Furniture 

For the year ended 31 March 2009 Buildings Technology Equipment & Fittings Total 


£000 £000 £000 £000 £000 

At 1 April 2008 411 1,006 338 509 2,264 

Additions 0 9 18 0 27 

Disposals 0 (16) (33) 0 (49) 


At 31 March 2009 415 999 323 509 2,246 

Depreciation 

At 1 April 2008 96 890 207 295 1,488 

Charged in year 35 42 35 46 158 

Disposals 0 (16) (33) 0 (49) 


At 31 March 2009 132 916 209 341 1,598 

NBV at 31 March 2009 283 83 114 168 648 

NBV at 31 March 2008 315 116 131 214 776 

49

6 Intangible Assets 


Software IT Intangible 

For the year ended 31 March 2010 Licences Software AUC Total 


£000 £000 £000 £000 

At 1 April 2009 399 7,904 1,069 9,372 

Additions 37 1,590 222 1,849 

Transfers 0 1,069 (1,069) 0 

Revaluations 0 (1) 0 (1) 

At 31 March 2010 436 10,562 222 11,220 

Depreciation 

At 1 April 2009 64 2,840 0 2,904 

Charged in year 55 1,057 0 1,112 

Reclassifications 0 52 0 52 

Revaluations 0 (1) 0 (1) 

At 31 March 2010 119 3,948 0 4,067 

NBV at 31 March 2010 317 6,614 222 7,153 

NBV at 31 March 2009 335 5,064 1,069 6,468 

Software 

Intangible 

For the year ended 31 March 2009 Licences IT Software AUC Total 


£000 £000 £000 £000 

At 1 April 2008 37 2,842 3,560 6,439 

Additions 0 88 2,845 2,933 

Reclassifications 362 4,974 (5,336) 0 

At 31 March 2009 399 7,904 1,069 9,372 

Depreciation 

At 1 April 2008 37 2,209 0 2,246 

Charged in year 27 632 0 659 

Impairments 0 (1) 0 (1) 

At 31 March 2009 64 2,840 0 2,904 

NBV at 31 March 2009 335 5,064 1,069 6,468 

NBV at 31 March 2008 0 633 3,560 4,193 

50

7 Trade receivables and other current assets 


31Mar10 31Mar09 01Apr08 

£000 £000 £000 

Amounts falling due within one year: 

Trade receivables 136 19 6 

Prepayments and accrued income 236 262 241 

Total receivable within 1 year 372 281 247 

8 Trade payables and other current liabilities 

31Mar10 31Mar09 01Apr08 

£000 £000 £000 

Amounts falling due within one year: 

Trade payables 4 20 11 

Other payables 217 225 209 

Accruals and deferred income 524 228 493 

Total due within one year 745 473 713 

Note: For the year to 31 Mar 2010 the Trade Payable Creditor movement in the Statement 

of Cash Flows has been adjusted by £3,545 to reflect the correction of Unallocated 

Receipts. 

51

9 Provisions for liabilities and charges 


52 

31Mar10 31Mar09 01Apr08 

£000 £000 £000 

Balance at 1 April 229 251 285 

Provided in the year 3 11 0 

Provisions utilised in the year (35) (33) (34) 

Balance at 31 March 197 229 251 

Rent Free Period 

The Agency was given a 6-month rent-free period, by the landlord, when it relocated to 

Tweedbank. This is released against future rent expenditure throughout the period of the lease. 

Early Retirement Costs 

The Agency brought the payment of NHS pensions in-house in February 2007. Under the terms 

of the contract with the previous provider (Paymaster (1836) Ltd), the Agency is bound to abide 

by TUPE (Transfer of Undertakings Regulations) legislation. The Agency is required to meet the 

additional employment costs arising from the transfer of this work from Paymaster (1836) Ltd to 

SPPA. The Agency meets the additional costs of benefits beyond the normal pension benefits in 

respect of Paymaster (1836) Ltd employees who retired early, by paying the required amounts 

annually to the retired employees over the period between early departure and normal retirement 

date. The Agency provided for this cost in full, when the early retirement programme became 

binding on the Agency, by establishing a provision for the estimated payments. 

10 Capital commitments 

Contracted capital commitments at 31 March 2010 were £305K (31 March 2009: £2.24 million). 

The capital commitments in 2009-10 relate primarily to the new pension administration system 

which will allow the Agency to administer with improved efficiency the NHS (Scotland) 

Superannuation Scheme. 

Contracted capital commitments at 31 March 2010 not otherwise included in these accounts: 

2009-10 

£000 

2008-09 

£000 

Intangible Assets 305 2,240

11 Commitments under Leases 


Commitments under operating leases for the total future minimum lease payments are given in the 

table below, analysed according to the time period they fall due. 

31Mar10 31Mar09 01Apr08 

Obligations under operating leases 

comprise: £'000 £'000 £'000 

Land and Buildings: 

Not later than one year 540 532 536 

Later than one year and not later than five years 2,371 2,289 2,197 

Later than five years 1,532 2,155 2,778 

Office Equipment: 

Not later than one year 17 10 3 

Later than one year and not later than five years 60 25 11 

Later than five years 2 8 0 

12 Related-party transactions 

53 

4,522 5,019 5,525 

The Scottish Public Pensions Agency is a Scottish Government agency, which is therefore regarded 

as a related party. During the year the Scottish Public Pensions Agency has had a number of 

material transactions with The Scottish Government. In addition, the Scottish Public Pensions 

Agency has had a small number of material transactions with The Government Actuarial Department. 

The total value was £283,635 for 2009-10 (2008-09: £197,447). 

During the year, none of the Board Members, key managerial staff or other related parties has 

undertaken any material transactions with the Scottish Public Pensions Agency.

13 Intra Government Balances 


54 

Trade Receivable Trade Payables 

amounts falling amounts falling 

due within one Due within one 

Year year 

£000 £000 

Balances with other 72 367 

central government 

bodies 

Balances with 300 378 

bodies external to 

government 

(Trade Payables includes accrued employee benefits) 

At 31 March 2010 372 745 

Balances with other 13 257 

central government 

Bodies 

Balances with 268 216 

bodies external to 

Government 

(Trade Payables includes accrued employee benefits) 

At 31 March 2009 

281 473

14a Explanation of the Transition to IFRS 


For all periods up to and including the year ended 31 March 2009, the SPPA prepared its 

annual report and accounts in accordance with UK GAAP. For the year ended 31 March 

2010, the SPPA is required to prepare its annual report and accounts in accordance with 

International Financial Reporting Standards (IFRS) as interpreted by the IFReM. 

IFRS 1 requires that when an entity adopts IFRS for the first time, comparative amounts 

are restated to reflect the new accounting policies, and that the date of transition to IFRS is 

the beginning of the earliest comparative year reported in the financial statements. For the 

SPPA applying IFRS from 2009-10, this means that the effective date of transition to IFRS 

is 1 April 2008. 

The IFRS also requires that accounting policies are applied retrospectively i.e. as if the 

transactions had always been accounted for under the new policy. 

Reconciliation of Taxpayer’s equity from UK GAAP to IFRS as at 31 

March 2008 and 31 March 2009 

Taxpayers’ equity at 31 March 

2008 under UK GAAP 

55 

General 

Fund 

Revaluation 

reserve 

TOTAL 

RESERVES 

£000 £000 £000 

4,359 102 4,461 

Adjustments for: 

IAS 19 Employee Benefits 

Taxpayers’ equity at 1 April 

(209) 0 (209) 

2008 under IFRS 

4,150 102 4,252 

Taxpayers’ equity at 31 March 

2009 under UK GAAP 


6,848 72 6,920 


Taxpayers’ equity at 1 April 

(225) 0 (225) 

2009 under IFRS 6,623 72 6,695


Reconciliation of Operating Cost Statement for the year ended 31 March 

2009 from UK GAAP to IFRS 

£000 

Net operating cost for 2008-09 under 

UK GAAP 


9,550 


Net operating cost for 2008-09 under 

16 

IFRS 

9,566 

IAS 19 Employee benefit 

IAS19 applies to the accounting for employee benefits, which states that entities must 

recognise the expected cost of short term accumulating compensated absences. An exercise 

to cost the amount of holiday entitlement owed to staff at the end of each financial year has 

been carried out. To recognise the costs an accrual has been reflected in the balance sheet. 

IAS 36 Impairment of 

Assets 

Under IAS 36 an impairment review of assets has been conducted. Only the recoverable 

amounts are included in the asset valuations. These adjustments reflect the write down in asset 

value as a result of the impairment reviews. 

IAS 38 Intangible assets 

Under UK GAAP internally-generated intangible assets may not be capitalised unless they have a 

readily ascertainable market value. However under IAS 38 development expenditure may be 

capitalised if stringent rules are met. 

IAS 16 Property, Plant and 

Equipment 

IAS 16 recognises that parts of some items of property, plant, and equipment may require 

replacement at regular intervals. An exercise has been completed to identify each part of an item 

of property, plant and equipment with a cost that is significant in relation to the total cost, so that 

each part is measured separately. 

IAS 37 

Provisions 

IAS37 requires that in measuring a provision, the provision should be discounted, where the effect 

of the time value of money is material, using a rate that reflects current market assessments of the 

time value of money. Where discounting is used, the carrying amount of a provision increases in 

each period to reflect the passage of time. This increase is recognised as borrowing cost and an 

adjustment to the interest payable has been made to reflect this. 

56

14b First-time adoption of IFRS 


Restatement of opening balance sheet following implementation of IFRS standards at 1 April 2008 

Per 2008-09 IFRS IFRS IFRS 

UK GAAP IAS 19 IAS 38 opening 

Statement of 

Employee Intangible financial 

At 1 April 2008 accounts benefit 

assets position 

Fixed Assets 

£000 £000 £000 £000 

Tangible Assets 4,969 (4,193) 776 

Intangible Assets - 4,193 4,193 

Financial Assets - - 

Debtors > 1 Yr - - 

4,969 - - 4,969 

Current Assets 

Stocks - 

Debtors 247 247 

Cash at bank and in Hand - - 

- 

- 

247 - - 247 

Creditors (due within one year) 504 209 713 

- 

- 

504 209 - 713 

Net Current Assets/(Liabilities) (257) (209) - (466) 

Total Assets less Current Liabilities 4,712 (209) - 4,503 

Creditors (falling due after more than one 

year) - 

- 

Provisions for Liabilities and Charges 251 251 

251 - - 251 

57 

5,216 

4,461 (209) - 4,252 

Taxpayers' Equity 

General Fund 4,359 (209) 4,150 

Revaluation Reserve 102 102 

Donated Assets Reserve - 

EU Grant Reserve - 

4,461 (209) - 4,252


Restatement of closing balance sheet following implementation of IFRS standards at 31 March 2009 

At 31 March 2009 accounts 

Fixed Assets 

Per 2008-09 IFRS IFRS IFRS 

UK GAAP IAS 19 IAS 38 opening 

58 

Employee 

benefit 

Intangible 

assets 

Statement of 

financial 

position 

£000 £000 £000 £000 

Tangible Assets 6,781 (6,133) 648 

Intangible Assets 335 6,133 6,468 

Financial Assets - 

Debtors > 1 Yr - 

Current Assets 

7,116 - - 7,116 

Stocks - 

Debtors 281 281 

Cash at bank and in Hand - 

281 - - 281 

Creditors (due within one year) 248 225 473 

- 

- 

7,397 

248 225 - 473 

Net Current Assets/(Liabilities) 33 (225) - (192) 

Total Assets less Current Liabilities 7,149 (225) - 6,924 

Creditors (falling due after more than one 

year) - 

- 

Provisions for Liabilities and Charges 229 229 

229 - - 229 

6,920 (225) - 6,695 

Taxpayers' Equity 

General Fund 6,848 (225) 6,623 

Revaluation Reserve 72 72 

Donated Assets Reserve - 

EU Grant Reserve - 

6,920 (225) - 6,695 

- 

-



DIRECTION BY THE SCOTTISH MINISTERS 

in accordance with section 19(4) of the Public Finance and Accountability 

(Scotland) Act 2000 

1. The statement of accounts for the financial year ended 31 March 2006 and 

subsequent years shall comply with the accounting principles and disclosure 

requirements of the edition of the Government Financial Reporting Manual 

(FReM) which is in force for the year for which the statement of accounts are 

prepared. 

2. The accounts shall be prepared so as to give a true and fair view of the 

income and expenditure, recognised gains and losses, and cash flows for the 

financial year, and of the state of affairs as at the end of the financial year. 

3. This direction shall be reproduced as an appendix to the statement of 

accounts. The direction given on 29 March 2001 is hereby revoked. 

Signed by the authority of the Scottish Ministers 

17 January 2006 

59

File: pdf 307kb - Scottish Public Pensions Agency

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