RBS 2005 Annual Report Download - page 131

section
02
Governance
129
Directors’ remuneration report
Annual Report and Accounts 2005
Directors’ pension arrangements
During the year, Sir Fred Goodwin, Gordon Pell, Iain Robertson
and Fred Watt participated in The Royal Bank of Scotland
Group Pension Fund (“the RBS Fund”). The RBS Fund is a
defined benefit fund which provides pensions and other
benefits within Inland Revenue limits.
The pension entitlements of Sir Fred Goodwin, Mr Pell, Mr
Robertson and Mr Watt within the RBS Fund are restricted
by Inland Revenue limits as set out in the Finance Act 1989.
Additional life assurance cover in excess of these limits is
provided by a separate arrangement. Arrangements have been
made to provide Sir Fred Goodwin and Mr Pell with additional
pension benefits on a defined benefit basis outwith the RBS
Fund. The figures shown below include the accrual in respect
of these arrangements. Mr Watt was provided with additional
pension benefits on a defined contribution basis and
contributions made in the year are shown below.
No changes are proposed to the level or form of pension
benefits for any of the current directors as a result of the
changes in pension legislation which come into force in April
2006 although as stated above directors will be able to opt out
of tax-approved pension provision if they wish and receive a
salary supplement in lieu. In addition consideration will be
given to funding a greater proportion of the benefits.
Of the total transfer value as at 31 December 2005 shown,
25% relates to benefits in funded pension schemes.
Sir George Mathewson receives life insurance cover under an
individual arrangement. The non-executive directors do not
accrue pension benefits, other than Mr Robertson who
continued to accrue benefits in the RBS Fund after his
appointment as a non-executive director.
Lawrence Fish accrues pension benefits under a number of
arrangements in the US. Defined benefits are built up under
the Citizens’ Qualified Plan, Excess Plan and Supplemental
Executive Retirement Arrangement. In addition, he is a
member of two defined contribution arrangements – a
Qualified 401(k) Plan and an Excess 401(k) Plan.
As in the 2004 Report and Accounts, disclosure of these
benefits has been made in accordance with the United Kingdom
Listing Authority Listing Rules and the Combined Code and with
the Directors’ Remuneration Report Regulations 2002.
Transfer value
Additional Additional for the additional
pension pension Increase pension
earned earned in transfer earned
Accrued during the during the Transfer Transfer value during during the
entitlement at year ended year ended value as at value as at year ended year ended
Age at 31 December 31 December 31 December 31 December 31 December 31 December 31 December
31 December 2005 2005 2005* 2005 2004 2005 2005*
Defined benefit arrangements 2005 000 p.a. 000 p.a. 000 p.a. 000 000 000 000
Sir Fred Goodwin 47 £444 £63 £51 £5,119 £3,591 £1,528 £592
Mr Pell 55 £302 £55 £47 £5,092 £3,592 £1,500 £790
Mr Robertson 60 £37 £4 £3 £676 £565 £111 £48
Mr Watt 45 £9 £2 £2 £96 £62 £34 £19
Mr Fish 61 $1,384 $244 $244 $13,347 $10,046 $3,301 $2,350
* net of statutory revaluation applying to deferred pensions
Notes:
(1) There is a significant difference in the form of disclosure required by the Combined Code and the Directors’ Remuneration Report Regulations 2002. The former requires the
disclosure of the additional pension earned during the year and the transfer value equivalent to this pension based on stock market conditions at the end of the year. The latter
requires the disclosure of the difference between the transfer value at the start and end of the year and is therefore dependent on the change in stock market conditions over
the course of the year. The above disclosure has been made in accordance with the Combined Code and the Directors’ Remuneration Report Regulations 2002.
(2) Mr Robertson continued to accrue pension during his service with the Group in 2005 after resignation as a director. The figures above include the pension accrued during this
subsequent service.
(3) The transfer values disclosed above do not represent a sum paid or payable to the individual director. Instead they represent a potential liability of the company /pension scheme.
(4) No allowance is made in these transfer values for any enhanced benefits that may become payable on early retirement.
(5) The proportion of benefits represented by funded pension schemes for Sir Fred Goodwin, Gordon Pell and Lawrence Fish is 3%, 69% and 3% respectively. All benefits for
Iain Robertson and Fred Watt are in funded pension schemes.
(6) Following Mr Pell’s appointment as Executive Chairman, Retail Markets, he was awarded enhanced pension benefits.
(7) In accordance with US market practice, Mr Fish’s pensionable remuneration is limited to $4 million per annum.
Contributions and allowances paid in the year ended 31 December 2005 under defined contribution arrangements were:
2005 2004
000 000
Mr Watt £144 £128
Mr Fish $139 $91
Bob Scott
Chairman of the Remuneration Committee
27 February 2006