RBS 2008 Annual Report Download - page 169

RBS Group Annual Report and Accounts 2008168
Directors’ remuneration report continued
Directors’ pension arrangements
Stephen Hester and Guy Whittaker are provided with a cash allowance
in place of pension benefits as detailed on page 164.
During 2008, Johnny Cameron, Sir Fred Goodwin and Gordon Pell
accrued pensionable service in The Royal Bank of Scotland Group
Pension Fund (the “RBS Fund”). The RBS Fund is a defined benefit fund
registered with HM Revenue & Customs under the Finance Act 2004.
Sir Fred Goodwin was, and Gordon Pell is, provided 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. A funded, non-registered arrangement provides Sir Fred
Goodwin’s benefits to the extent they are not provided by the RBS Fund.
Johnny Cameron’s benefits were based on salary limited to the
pensions earning cap and he received a cash allowance in place of
pension on salary above this cap.
Mark Fisher opted to cease future accrual of pension benefit within the
RBS Fund with effect from 6 April 2006. The increase in pension shown
in the table arises from his increase in pensionable salary over the year.
He was provided with a cash allowance in place of further pension
benefits as detailed on page 164.
The cash allowances for Johnny Cameron and Mark Fisher are shown
on page 164.
Larry Fish accrued pension benefits under a number of arrangements
in the US. Defined benefits were built up under the Citizens’ Qualified
Plan, Excess Plan and Supplemental Executive Retirement
Arrangement. In addition, he was a member of two defined contribution
arrangements: a Qualified 401(k) Plan and an Excess 401(k) Plan until
he became a non-executive director on 1 May 2008.
Of the total transfer value shown as at 31 December 2008, 54% relates
to benefits in funded pension schemes.
Disclosure of these benefits has been made in accordance with the
United Kingdom Listing Authority Listing Rules 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 2008 2008 2008* 2008 2007 2008 2008*
Defined benefit arrangements 2008 £000 p.a. £000 p.a. £000 p.a. £000 £000 £000 £000
Mr Pell 58 517 94 77 9,831 8,403 1,428 1,473
Sir Fred Goodwin 50 693 114 92 16,630(1) 8,370 8,260 2,060
Mr Cameron 54 62 641,363(1) 931 432 78
Mr Fish 64 $2,237 $157 $157 $27,004 $24,101 $2,903 $1,893
Mr Fisher 48 398 61 48 4,810 4,562 248 581
*Net of statutory revaluation applying to deferred pensions
Note:
(1) Sir Fred Goodwin retired from employment with effect from 31 January 2009 and Johnny Cameron will retire from employment with effect from 28 February 2009. They were contractually entitled to
an immediate pension based on their accrued service, including any service transferred in, with no discount for early payment. The valuation of their pensions as at 31 December 2008 in the
table above takes account of the payment dates of these pensions. Employees in the RBS Fund, including directors, who retire early at the request of their employer, are entitled to an immediate
pension with no discount for early payment. The provision for an early undiscounted pension on early retirement at employer request will not apply to any executive director appointed in the future.
Except as noted above for Sir Fred Goodwin and Johnny Cameron, the valuations in the table above make no allowance for early retirement.
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 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
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 both of these documents.
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 Group’s pension schemes.
The proportion of benefits represented by funded pension schemes for
Gordon Pell and Larry Fish is 46% and 2% respectively. All benefits for
Johnny Cameron, Mark Fisher and Sir Fred Goodwin are in funded
pension schemes.
In accordance with US market practice, Larry Fish’s pensionable
remuneration was limited to US$4 million per annum.
Larry Fish retired from employment with effect from 30 April 2008 and
his pension benefits started on 1 May 2008.
Contributions and allowances paid in the year ended 31 December
2008 under defined contribution arrangements were:
2008 2007
$000 $000
Mr Fish 6 60
Colin Buchan
Chairman of the Remuneration Committee
25 February 2009