RBS 2009 Annual Report Download - page 238

RBS Group Annual Report and Accounts 2009236
Directors’ remuneration report continued
Directors’ pension arrangements
During 2009 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.
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.
Disclosure of these benefits has been made in accordance with the
United Kingdom Listing Authority’s Listing Rules and with the Large and
Medium-sized Companies and Groups (Accounts and Reports)
Regulations 2008.
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 2009 2009 2009* 2009 2008 2009 2009*
Defined benefit arrangements 2009 £000 p.a. £000 p.a. £000 p.a. £000 £000 £000 £000
Gordon Pell 59 582 65 40 13,581 9,831 3,750 923
*Net of statutory revaluation applying to deferred pensions.
Gordon Pell will retire from the Group at the end of March, shortly after
his normal pension age of 60, and the pension value above has been
calculated on this basis. His pension at retirement will be based on his
39 years of service with Lloyds TSB and with the Group, part of which
has been funded by a transfer payment from a Lloyds TSB pension plan.
There is a significant difference in the form of disclosure required by the
Listing Rules and the Large and Medium-sized Companies and Groups
(Accounts and Reports) Regulations 2008. The former requires
disclosure of the additional pension earned during the year and the
transfer value equivalent to this pension based on financial 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 financial conditions over the
course of the year. During 2009, the real discount rate used to calculate
all transfer values fell from 2.8% to 1.5%. As a result, Gordon Pell’s
transfer value increased to a greater extent than the amount of his
pension. There has been no augmentation to his pension during 2009
or as a result of his retirement.
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 is 43%.
Stephen Hester and Bruce Van Saun are, and Guy Whittaker was, provided with a cash allowance in place of pension benefits as detailed below:
2009 2008
Cash allowances in place of pension £000 £000
Executive directors
Stephen Hester 420 52
Bruce Van Saun 80 —
Former executive director
Guy Whittaker 217 282
Colin A. M. Buchan
Chairman of the Remuneration Committee
24 February 2010