7.1. Expenses of the Agency for specified functions

1. * The pension adjustment is the difference between the provision for pension costs in the Income and Expenditure Account and the actual pension contributions made.

7.2. Agency costs

1. ¹Other staff costs include training, recruitment, temporary staff and secondment fees.

7.3. Remuneration

The following remuneration disclosures are required under The Code of Practice for the Governance of State Bodies (2016) (“the Code”). As this is the first-time adoption current year figures are presented as follows:

Key management personnel in the NTMA consist of Agency and committee members as referred to in the Governance Statement, the Chief Executive and the Executive Management Team (“EMT”). The value of employee benefits for key management personnel is set out above (excluding Pay Related Social Insurance).

This does not include the value of retirement benefits earned in the period. The key management personnel (excluding the Agency members’ and the Chief Executive) are members of NTMA pension scheme and their entitlements in that regard do not extend beyond the terms of the model public service pension scheme.

Chief Executive Salary and Benefits

The remuneration of the Chief Executive is determined in accordance with sections 7(2) and 8 of the National Treasury Management Agency Act 1990.

The remuneration of Conor O’Kelly consists of basic remuneration and taxable benefits (health insurance). Conor O’Kelly did not receive a discretionary performance related payment in respect of 2017.

In addition to the disclosures required under the Code the following remuneration disclosures are noted:

Disclosures in respect of Agency staff excluding officers assigned to NAMA

Voluntary redundancy scheme

There was no Voluntary Redundancy Scheme (‘VRS’) in 2017 or 2016 with the exception of officers assigned to NAMA which is disclosed separately.

Garden leave

Four Agency staff were placed on garden leave during 2017 (2016: three) with an attributable 2017 cost of approximately €0.2m (2016: €0.1m). The average period of garden leave for the four staff was two months (2016: two months). The decision on whether to place these four staff members on garden leave was made on a case-by-case basis and included consideration, inter alia, of the person’s role within the Agency and the person’s new employer.

Other Staff Costs

No retention arrangement has been entered into since mid-2014 and such arrangements do not extend beyond 2017. In respect of pre-existing arrangements payments totalling €0.1m were made to two members of staff in 2017 (2016: €0.1m to three members of staff). These payments were made on a limited and exceptional basis in order to retain the expertise and experience of key staff in critical business areas. The practice of entering into employment contracts providing for retention payments has been discontinued.

Disclosures in respect of officers assigned to NAMA

Voluntary redundancy scheme – NAMA

In 2017, ten employees assigned to NAMA participated in a VRS (2016: forty-one employees). Costs of €0.8m (2016: €3.9m) relating to the VRS have been recognised in 2017. Costs of €0.4m (2016: €1.7m) were attributable to statutory and other redundancy payments, €0.2m (2016: €0.8m) related to the “NAMA retention scheme”¹ and €0.2m (2016: €1.4m) for garden leave.

1. ¹The NAMA retention scheme only applies in circumstances where staff members are made redundant, have met all required performances standards, and have remained with NAMA for the period required to fulfil the NAMA’s statutory mandate.

Garden leave – NAMA

Nine employees assigned to NAMA were placed on garden leave during 2017 (2016: forty-one) as part of the VRS. This does not represent an incremental cost for the Agency but instead forms part of the overall Agency salary cost that would have been incurred regardless of the decision to place the relevant staff on garden leave. The average period of garden leave under the VRS was three months (2016: three months). In addition to those accepted for the VRS, five staff (2016: seven) were placed on garden leave during 2017 with an attributable cost of approximately €0.1m (2016: €0.2m). The average period of garden leave for the five staff was two months (2016: two months). The decision on whether to place these five staff members on garden leave was made on a case-by-case basis and included consideration, inter alia, of the person’s role within the Agency and the person’s new employer.

7.4. Retirement benefits

Superannuation entitlements of staff are conferred under a defined benefit superannuation scheme established under section 8 of the National Treasury Management Agency Act, 1990. Contributions are transferred to an externally managed fund. The Agency contribution is determined on the advice of an independent actuary. Following a triennial actuarial review in 2016, the Agency contribution was maintained at 14.2% (2016: 14.2%) of salary in respect of members of the Scheme. Contributions to the defined benefit scheme by the Agency for the year ended 31 December 2017 amounted to €9.1m (2016: €9.1m).

Liabilities arising under the defined benefit scheme are provided for under the above arrangements, except for entitlements arising in respect of the service of certain members of the Agency’s staff recruited from other areas of the public sector. On 7 April 1997 the Minister for Finance designated the Agency as an approved organisation for the purposes of the Public Sector (Transfer of Service) Scheme. This designation provides for, inter alia, contributions to be paid out of the Exchequer, as and when benefits fall due for payment in the normal course, in respect of prior service of former public servants employed by the Agency. No provision has been made for funding the payment of such entitlements.

The Agency contributes to a retirement scheme on behalf of the Chief Executive (note 7.3). The Agency also contributed €24k (2016: €26k) to PRSAs for a number of employees who are not members of the defined benefit scheme in 2017.

7.5. Operating expenses

Other operating expenses of €14.0m (2016: €13.7m) include technology costs, occupancy costs, business services costs and staff travel expenses.

Professional fees of €6.1m (2016: €3.6m) include advisory fees of €4.8m that require disclosure under the Code and other professional fees of €1.3m.

Advisory fees include the cost of external advice to management and exclude ‘business-as-usual’ functions. As this is the first-time adoption of the Code, current year figures are presented as follows:

Advisory fees of €6.2m include €1.9m incurred and recovered on behalf of the Shareholding and Financial Advisory Division (Note 5). In addition €0.2m of the advisory fees above were reimbursed to the Agency by NAMA, SBCI and ISIF.

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