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Directors’ Remuneration report continued
Pension – Pace
Pace includes the defined benefit section (Pace Complete) and the defined contribution sections (Pace Essential and Pace Extra). All employees can choose to
join Pace Complete once they have completed two or more consecutive years’ service.
• Pace Complete provides defined benefit pensions based on 1/60th of average pensionable earnings, revalued by inflation for each year of pensionable service.
Benefits accrued as at 5 April 2006, in respect of membership of the scheme preceding Pace, continue to be linked to final pensionable salary at a member’s
date of leaving or retirement, whichever is earlier. The scheme also provides pensions to dependants on death.
• Members of Pace Essential, into which all eligible employees will be automatically enrolled, currently pay 1% of pay and the Group pays 2%. Members of Pace
Extra, which is available to all employees, currently pay 4% of pay and the Group pays 8%.
• Under all sections a lump sum is payable if death occurs in service.
• All members of Pace have the choice of making pension contributions by salary sacrifice.
Executive Directors who are members of Pace Complete currently contribute 8% of their pensionable salary or 7% of pensionable salary (until October 2013)
if they were a contributing member of Pace at 31 December 2011. The Group pays the balance of the cost of providing defined benefits.
Where an Executive Director may be impacted by the Annual Allowance or the Lifetime Allowance, they have the facility of opting out of future pension accrual
in favour of a pension allowance or opting for restricted pension accrual based on a capped pensionable salary of £187,500 and receiving a restricted pension
allowance in lieu of pension provision based on salary above £187,500. Where paid, the rate of pension allowance is based on the employer contribution rate to
Pace Complete. This is currently 16% of pensionable salary.
Executive Directors who join Pace Extra are provided with an additional 8% of pay as a pension contribution or pension allowance for the period they are ineligible
to join Pace Complete.
Supplementary life cover is provided to Executive Directors in order to provide total life cover of 4 x salary when aggregated with benefits from Pace,
as appropriate.
Additional information
During the year, long term incentives were awarded on the basis that clawback provisions would apply to any payments, under which the Committee could seek
to recoup part or all of a payment by reference to subsequent business performance.
Any variable payments made to the Executive Directors are subject to deferral in accordance with the Remuneration Code. Deferred payments are subject to a
malus adjustment where the value can be adjusted downwards to take account of specified conditions for example, in an instance of an executive action which
leads to customer detriment or if there is a material breach of risk management.
Service contracts and policy on payment for loss of office
It is the Bank’s current policy that the notice period in Executive Directors service contracts should not exceed one year, save in the case of Niall Booker, whose
contract can be terminated by the Company on not less than 12 months’ notice, such notice not to expire prior to 10 June 2015. Niall Booker may terminate
his employment by the giving of 6 months’ notice to the Bank. All the other Executive Directors have contracts which can be terminated by one year’s notice by
either party. In the event of termination, the standard payment due to an Executive Director would be based on the value of base salary and other contractual
benefits (in the case of Niall Booker, to include any role based allowance which may be due under the terms of his contract). Where it is deemed commercially
beneficial for an individual to remain under a contract of employment with the Bank, they are placed on garden leave and only contractual payments are made.
The Committee could exercise its discretion relating to any deferred payments due from previous variable pay awards and could reduce such deferred payments
to zero in light of subsequent events.
Non-Executive Directors
Future fee policy
The Bank is developing a new Non-Executive Director fee policy that will be appropriate going forward as an independent business. Whilst the new policy is being
developed, the Committee does not consider it appropriate to put a policy forward for a vote at the 2014 AGM.
The Co-operative Bank plc Annual report and accounts 2013
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