Directors' pension arrangements
During the year, Johnny Cameron, Mark Fisher, Sir Fred Goodwin, Gordon Pell and Fred Watt participated 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.
The legislation governing the taxation of pensions in the UK changed with effect from April 2006. No changes have been made to the level of pension benefits of any of the directors as a result of this legislation, however the arrangements for providing some benefits have changed as follows.
Arrangements had previously been made to provide Sir Fred Goodwin and Gordon Pell with additional pension benefits on a defined benefit basis outwith the RBS Fund. No changes have been made to the overall level of benefits to be provided, but the amount which can be provided from within the RBS Fund may be different than previously envisaged. The figures shown below include the accrual in respect of these arrangements.
Johnny Cameron and Fred Watt were provided with additional pension benefits on a defined contribution basis and the contributions made in the year are shown below. These contributions ceased with effect from April 2006 and were replaced by a salary supplement which is shown in the table on page 119. Mark Fisher opted to cease future accrual of pension benefit within the RBS Fund with effect from 6 April 2006 and to receive instead a salary supplement. Guy Whittaker has been provided with a salary supplement in place of pension benefits since his employment started. These cash allowances are shown in the table on page 119.
Of the total transfer value shown as at 31 December 2006, 34% relates to benefits in funded pension schemes.
Sir George Mathewson received life assurance cover under an individual arrangement until his retirement from the Board. Details of his current benefits are set out on page 119. The non-executive directors do not accrue pension benefits or receive life assurance cover.
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.
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.
| Defined benefit arrangements | Age at 31 December 2006 |
Accrued entitlement at 31 December 2006 £000 p.a. |
Additional pension earned during the year ended 31 December 2006 £000 p.a. |
Additional pension earned during the year ended 31 December 2006* £000 p.a. |
Transfer value as at 31 December 2006 £000 |
Transfer value as at 31 December 2005 £000 |
Increase in transfer value during year ended 31 December 2006 £000 |
Transfer value for the additional person earned during the year ended 31 December 2006* £000 |
| Sir Fred Goodwin | 48 | 510 | 66 | 54 | 7,043 | 5,119 | 1,924 | 745 |
| Mr Cameron | 52 | 51 | 4 | 3 | 824 | 655 | 169 | 48 |
| Mr Fish | 62 | $1,829 | $445 | $445 | $17,800 | $13,347 | $4,453 | $4,330 |
| Mr Fisher | 46 | 302 | 26 | 18 | 3,904 | 2,978 | 926 | 239 |
| Mr Pell | 56 | 361 | 59 | 51 | 6,744 | 5,092 | 1,652 | 956 |
| Mr Watt | 45 | 10 | 1 | — | 108 | 96 | 12 | 3 |
* 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) 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 pension scheme.
(3) No allowance is made in these transfer values for any enhanced benefits that may become payable on early retirement.
(4) The proportion of benefits represented by funded pension schemes for Sir Fred Goodwin, Gordon Pell and Lawrence Fish is 3%, 60% and 2% respectively. All benefits for Johnny Cameron, Mark Fisher and Fred Watt are in funded pension schemes.
(5) In accordance with US market practice, Mr Fish’s pensionable remuneration is limited to US$4 million per annum.
(6) The above figures include pension accrued for Mr Watt for the period until cessation of employment on 28 February 2006.
Contributions and allowances paid in the year ended 31 December 2006 under defined contribution arrangements were:
| 2006 £000 |
2005 £000 |
|
| Mr Cameron | £46 | — |
| Mr Watt | £25 | £144 |
| Mr Fish | $56 | $139 |
Bob Scott
Chairman of the Remuneration Committee
28 February 2007
© 2007