HSBC 2005 Annual Report Download - page 230

HSBC HOLDINGS PLC
Directors’ Remuneration Report (continued)
228
Pensions
There are separate schemes for UK-based and
overseas-based employees: the UK scheme has a
normal retirement age of 60; retirement ages for
overseas schemes vary in accordance with local
legislation and practice. Save as stated below no
other Director participated in any HSBC pension
schemes, none of the Directors participating in
HSBC’s UK ‘approved’ pension schemes is subject
to the earnings cap introduced by the 1989 Finance
Act and only basic salary is pensionable. With one
exception (see paragraphs below on D J Flint), the
current executive Directors are members of defined
benefit pension schemes, having joined HSBC at a
time when these were the norm.
Before commencement of the 2002 employment
agreement on 28 March 2003, W F Aldinger
participated in HSBC Finance Corporation’s
‘qualified’ and ‘non-qualified’ defined benefit
pension plans. The annual pension benefit under
these arrangements was a function of service and a
percentage of final average earnings (which included
bonus). The ‘non-qualified plans’ were enhanced
before commencement of the 2002 employment
agreement. The benefits under the ‘qualified’ and
‘non-qualified’ defined benefit pension plans were
then frozen and became payable in a lump sum on
Mr Aldinger’s retirement on 29 April 2005. No
further benefits accrued under these arrangements
after 28 March 2003.
Up to his retirement on 29 April 2005, Mr
Aldinger participated in the HSBC North America
(U.S.) Tax Reduction Investment Plan (TRIP).
Employer contributions of US$10,500 were made to
this plan on behalf of Mr Aldinger in 2005 (2004:
US$10,250).
Mr Aldinger also participated in the
Supplemental TRIP (a ‘non-qualified’ plan), which is
an unfunded arrangement under which additional
employer provision of US$606,423 was made during
2005 (2004: US$289,749).
The pension arrangements for Sir John Bond,
S K Green and A W Jebson to contractual retirement
age of 60 are provided under the HSBC Bank (UK)
Pension Scheme. The pensions accrue at a rate of
one-thirtieth of pensionable salary for each year of
pensionable service in the UK.
The existing pension arrangements for D J Flint
to contractual retirement age of 60 are provided
through an executive allowance set at 30 per cent of
basic salary which is paid to fund personal pension
arrangements. In addition he participates in the
HSBC Holdings plc Funded Unapproved Retirement
Benefits Scheme on a defined contribution basis
with an employer contribution during 2005 of
£92,500 (2004: £86,013). The intention of these
arrangements is to provide benefits broadly
comparable to an accrual rate of one-thirtieth of
pensionable salary for each year of pensionable
service. From 5 April 2006, this Funded Unapproved
Retirement Benefits Scheme will be closed. So as to
ensure that pension arrangements for Mr Flint
remain broadly comparable to the existing
arrangements, the executive allowance will increase
to 55 per cent of annual basic salary.
The pension arrangements for D G Eldon are
provided under the HSBC International Staff
Retirement Benefits Scheme with a normal accrual
rate of one twenty-seventh of pensionable salary per
year of pensionable service. These arrangements are
part of a remuneration package which includes a
number of expatriate benefits.
Since his appointment as an executive Director
in 2004, M F Geoghegan has remained a member of
the HSBC International Staff Retirement Benefits
Scheme whilst no longer in receipt of expatriate
benefits. A full review of Mr Geoghegan’s
remuneration identified, in particular, that his
pensionable pay of £252,000 was not aligned to his
actual 2005 gross salary of £632,500. To bring his
pension arrangements to a level more appropriate
both to his actual gross salary and his more than
30 years of service, Mr Geoghegan’s pension
provision will be adjusted to reflect his actual gross
salary. The transfer value will be placed into a
defined contribution arrangement in Mr
Geoghegan’s name with no further funding from
HSBC after 31 March 2006. Thereafter, he will
receive an annual executive allowance of 50 per cent
of annual salary to fund personal pension
arrangements.
In addition, Mr Geoghegan participates in the
HSBC Asia Holdings Pension Plan, on a defined
contribution basis, with an employer contribution in
respect of 2005 of £1,818,750 (2004: £1,200,000),
arising entirely from a bonus sacrifice. There were
no other employer contributions made to this plan.