Holiday Inn 2013 Annual Report Download - page 93

Total pension entitlements (audited information)
From 2014, two changes to pension arrangements are being made
in line with the objective of significantly reducing the defined
benefit liability and risks in the Company’s balance sheet.
Richard Solomons is eligible for the Enhanced Early Retirement
Facility (EERF), which is available to all members of the plan.
Richard Solomons’ facility is being phased out in line with all
other plan members meaning that he could retire without
reduction to his pension from approximately age 58 and no earlier.
This provision only applies on consent of the Company. Prior to
the phasing out, Richard Solomons was eligible to retire without
reduction from age 55.
Although the EERF is non-contractual, as part of the consultation
with employees and the plan trustees with regards to the changes
in the defined benefit section of the IC Plan in June 2013, it was
agreed at that time that the EERF would be retained. However,
the decision has now been made to phase out this facility as part
of the process of redrawing the Company’s pension arrangements.
The EERF terms require an executive to obtain Company consent.
Richard Solomons participated in the executive defined benefit
section of the IC Plan and the unfunded InterContinental Executive
Top-Up Scheme (ICETUS) until June 2013, when they both closed to
future accruals.
As set out in the Remuneration Committee Chairman’s statement,
in 2014 the Company is looking to reduce the risks and volatility
from the remaining unfunded ICETUS pension arrangements by
offering members an opportunity to cash out the ICETUS element
of their pension on a basis that is fair and reasonable, both to them
and to shareholders. Currently, approximately 11 UK employed
executives participate in the ICETUS arrangement.
This is part of the process of redrawing IHG’s pension arrangements
and minimising the future risks to the company. In the event the
cash-out offer is accepted by an Executive Director, details will be
disclosed in the relevant Annual Report on Directors’ Remuneration.
This is in relation to previously disclosed benefits.
Themain features of the executive defined benefit section of the
IC Plan, which is a funded, final salary, occupational scheme are:
• normal pension age of 60 (9 October 2021, for Richard Solomons);
• pension accrual of 1/30th of final pensionable salary for each
year of pensionable service;
• life assurance cover of four times pensionable salary;
• pensions payable in the event of ill-health; and
• spouse’s, partner’s and dependents’ pensions on death.
Following the closure of these arrangements to future accrual
from July 2013, Richard Solomons receives a cash sum in lieu of
pension contributions.
Richard Solomons’ 2013 pension benefits are as follows:
£
Director’s contributions
for the year 17,760
Deemed capital value of accrued
benefits as at1 January 201317,544,000
Deemed capital value of accrued
benefits at 31December 20131 7,886,000
Increase in transfer value
over the year 342,000
Absolute increase in accrued
pensionper annum 17,100
Increase in accrued pension
(ie excluding inflation) per annum 5,400
1
The capital values disclosed above are based on the HM Revenue &
Customs methodology of valuing pensions at 20 times their annual
amounts, which is in line with the ‘Single Figure’ value stated
elsewhere in these Accounts; the 2012 Accounts included values
calculated on an actuarial basis, which was in line with regulations
applicable at the time.
£
Accrued value of annual pension
if retired at 31 December 2013
272,050 of which:
49,640 is funded
222,410 is unfunded
Accrued value of annual pension
at 31 December 2013, assuming
retirement at normal age
(9 October 2021)
394,300 of which:
71,950 is funded
322,350 is unfunded
Additional annual pension benefit
onearly retirement under EERF
at 31December 2013
78,860 of which:
14,390 is funded
64,470 is unfunded
In addition, in 2013 Richard Solomons received a cash
allowance in lieu of pension contributions of £110,850.
The breakdown of the pension element of the single figure
for2012 and 2013 for Richard Solomons is as follows:
2013
£000
2012
£000
Pension benefit under defined benefit
section of IC Plan 135 1,14 0
Cash allowance in lieu of
pensioncontribution 111 –
Total 246 1,140
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