Directors’ remuneration report
Pensions and life assurance
Background
In order to provide continuity of benefits for directors and employees, the Company established two pension schemes which broadly mirrored those operated by PF at the demerger date. These are the International Personal Finance plc Pension Scheme (‘the Pension Scheme’) and the International Personal Finance Stakeholder Pension Scheme (‘the Stakeholder Scheme’). Employees who join the Company and its UK subsidiaries are eligible to join the Stakeholder Scheme.
Benefits
The Pension Scheme is a defined benefit scheme with two sections: cash balance and final salary. The cash balance section provides members with a pension credit calculated as a percentage of basic salary in a retirement account. Currently the pension credit increases each year by the lower of 6.5% and the increase in RPI plus 1.5%. At retirement, up to 25% of the total value of the director’s retirement account can be taken as a lump sum, with the balance used to purchase an annuity. If the director dies in service, a death benefit of five times salary plus the value of the retirement account is payable. The final salary section provides a pension of up to two-thirds of basic salary at the normal retirement date of age 65.
Chairman
Christopher Rodrigues received a pension allowance of £86,250 (up until October 2008 when he became non-executive) and life assurance benefit of £2,000,000 (which ceased on 31 December 2008).
Chief Executive Officer
John Harnett has a defined contribution personal pension arrangement. He has life assurance benefit of four times salary at date of death. The Company contributes 30% of his basic salary (subject to a maximum of £112,500) to his pension arrangements. The Company’s contributions in respect of John Harnett during 2008 (including the cost of the life insurance) amounted to £113,654.
Finance Director
David Broadbent is the only director for whom retirement benefits are accruing under the Pension Scheme. He was a member of the final salary section until 1 April 2006 when he began to accrue benefits as a member of the cash balance section. He ceased to be a member of the cash balance section on 31 July 2008 and became a deferred member of the Pension Scheme.
Details of David Broadbent’s entitlements under both sections of the Pension Scheme are as follows:
| Final salary | £ |
|---|---|
| Accrued pension at 31 December 2008 | 12,577 |
| Accrued pension at 31 December 2007 | 12,060 |
| Increase in accrued pension during the year (net of inflation) | 408* |
| Transfer value of net increase in accrual over period | 3,537 |
| Transfer value of accrued pension at 31 December 2008 | 109,029 |
| Transfer value of accrued pension at 31 December 2007 | 72,430 |
| Total change in transfer value during the period (net of director’s contributions) | 36,599 |
| Director’s contributions in 2008 | 0 |
*Net of the increase in the Retail Prices Index.
| Cash balance | £ |
|---|---|
| Accrued cash balance lump sum at 31 December 2008 | 89,652 |
| Accrued cash balance lump sum at 31 December 2007 | 61,750 |
| Increase in cash balance lump sum during the year (net of inflation) | 27,346* |
| Transfer value of net increase in accrual over period | 27,346 |
| Transfer value at 31 December 2008 | 89,652 |
| Transfer value at 31 December 2007 | 61,750 |
| Total change in transfer value during the period (net of director’s contributions) | 21,777 |
| Director’s contributions in 2008 | 6,125 |
| Cost of life insurance | 691 |
*Net of the increase in the Retail Prices Index.
David Broadbent was age 40 at the end of the year.
David Broadbent now has a defined contribution personal pension arrangement. He has life assurance benefit of four times salary at date of death. The Company contributes 30% of his basic salary to his pension arrangements. The Company’s contributions in respect of David Broadbent during 2008 (including the cost of the life insurance) amounted to £31,689.
The Company is currently reviewing its pension policy and this review may result in changes later in the year.
Approved by the board on 23 March 2009.
Rosamond J Marshall Smith
General Counsel & Company Secretary
23 March 2009