C » Topics » Pension Benefits

This excerpt taken from the C DEF 14A filed Mar 13, 2008.

Pension Benefits

 

Name   Plan Name  

Number

of Years
Credited

Service

(#)

 

Present

Value of
Accumulated

Benefit

($)(1)

 

Payments

During Last

Fiscal Year

($)

Sir Winfried Bischoff

  CGMI Pension and Life Assurance Scheme   35.33   $ 8,387,104   $ 0

Vikram Pandit

  N/A   N/A   $ N/A   $ 0

Gary Crittenden

  N/A   N/A   $ N/A   $ 0

Sallie Krawcheck

  The Citigroup Pension Plan   5.25   $ 27,434   $ 0

Lewis Kaden

  The Citigroup Pension Plan   2.33   $ 20,520   $ 0

Michael Klein

  The Citigroup Pension Plan   22.33   $ 84,981   $ 0

Stephen Volk

  The Citigroup Pension Plan   3.42   $ 30,889   $ 0

Charles Prince

 

The Citigroup Pension Plan

Travelers RBEP

Travelers SERP

  28.92

22.92

14.92

  $

$

$

214,134

256,673

1,324,414

  $

$

$

0

0

0


(1)

 

The material assumptions used in determining the present value of the U.S. plan benefits are (a) the RP-2000 mortality table, (b) a discount rate of 6.20 percent, and (c) an interest credit rate on cash balance plan benefits of 5.20 percent. The material assumptions used in determining the present value of the U.K. plan benefits are (a) the PM/FA92U2007MC mortality table, (b) a discount rate of 5.80 percent, and (c) a limited price inflation (LPI) assumption of 3.30 percent. The plan discount rates are the same as the year-end 2007 rates used to prepare footnote 9 to the Consolidated Financial Statement of Citigroup Inc. and its subsidiaries, as filed with the SEC on Form 10-K for 2007. The other assumptions are not required to be stated in that footnote 9.

 

Citi’s current general policy on pension plans is that executives should accrue retirement benefits on the same basis available to Citi employees generally under Citi’s broad-based, tax-qualified retirement plans. This approach reflects Citi’s senior executive compensation principles, which generally provide that most compensation for senior executives should be based on performance.

 

Citi has not granted extra years of credited service under any retirement plan to any of the named executive officers. Future accruals under the nonqualified plans ceased for the executives while they continued to earn benefits under the qualified plan on the same basis as other U.S. employees.

 

The following describes the pension plans listed in the Pension Benefits Table under which the named executive officers have accrued benefits:

 

The Citigroup Pension Plan.    The purpose of this broad-based, tax-qualified retirement plan is to provide retirement income on a tax-deferred basis

to all U.S. employees. Effective January 1, 2002, this plan adopted a single cash balance benefit formula for most of the covered population, including the applicable named executive officers. This benefit is expressed in the form of a hypothetical account balance. Benefit credits accrue annually at a rate between 1.5 percent and 6 percent of eligible compensation; the rate increases with age and service. Interest credits are applied annually to the prior year’s balance; these credits are based on the yield on 30-year Treasury bonds (as published by the Internal Revenue Service). Employees become eligible to participate in the Citigroup Pension Plan after one year of service, and benefits generally vest after five years of service. Effective December 31, 2006, the Citigroup Pension Plan was closed to new members, and effective December 31, 2007, future cash balance plan accruals ceased.

 

Sir Winfried was not eligible for this plan in 2007 because he was a U.K. employee. Mr. Pandit and Mr. Crittenden are not eligible for a benefit under


 

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this plan because they joined Citi in 2007. All other named executive officers are eligible for benefit accruals under this plan.

 

Eligible compensation generally includes base salary and wages, plus shift differential and overtime (including any before-tax contributions to a 401(k) plan or other benefit plans), incentive awards paid in cash during such year, including any amount payable for such year but deferred under a deferred compensation agreement, commissions paid during such year, any incentive bonus or commission granted during such year in the form of restricted stock and/or stock options under core CAP, but excluding compensation payable after termination of employment, sign-on and retention bonuses, severance pay, cash and non-cash fringe benefits, reimbursements, tuition benefits, payment for unused vacation, any amount attributable to the exercise of a stock option, or attributable to the vesting of, or an 83(b) election with respect to, an award of restricted stock, moving expenses, welfare benefits, and payouts of deferred compensation. Annual eligible compensation was limited by Internal Revenue Service rules to $225,000 for 2007.

 

The normal form of benefit under the Citigroup Pension Plan is a joint and survivor annuity for married participants (payable over the life of the participant and spouse) and a single life annuity for single participants (payable for the participant’s life only). Although the normal form of the benefit is an annuity, the hypothetical account balance is also payable as a single lump sum, at the election of the participant. The Citigroup Pension Plan’s normal retirement age is age 65. All optional forms of benefit under this formula available to the applicable named executive officers are actuarially equivalent to the normal form of benefit. Benefits are eligible for commencement under the plan upon termination of employment at any age, so there is no separate eligibility for early retirement.

 

Pension accruals prior to January 1, 2002 were determined under different formulas depending upon a given employee’s specific employment history with Citi. All accruals before 2002 for the applicable named executive officers were under

cash balance formulas, which provided for a range of benefit credits increasing with age and years of service, and interest credit rates that were substantially the same as the current interest rate. The current interest credit rate applies to the participant’s entire account balance.

 

Travelers RBEP.    The purpose of the Travelers Retirement Benefits Equalization Plan (the “Travelers RBEP”), a nonqualified retirement plan, was to provide retirement benefits using the applicable Citigroup Pension Plan benefit formula, but based on the Citigroup Pension Plan’s definition of (a) compensation, in excess of the IRC qualified plan compensation limit ($170,000 for 2001), or (b) benefits, in excess of the IRC qualified plan benefit limit ($140,000 for 2001). In 1994, the Travelers RBEP was amended to limit qualifying compensation under the plan to $300,000 and was further amended in 2001 to cease benefit accruals after 2001 for most participants (including the named executive officer with an accrued benefit under this plan). Mr. Prince is the only named executive officer with an accrued benefit under this plan.

 

All other terms of the Travelers RBEP are the same as under the Citigroup Pension Plan, including definitions of eligible compensation and normal retirement age. The optional forms of benefit available under this plan and their equivalent values are the same as those under the Citigroup Pension Plan.

 

Travelers SERP.    The purpose of the Travelers SERP, a nonqualified retirement plan, was to provide additional retirement benefits to certain executives. Accruals were frozen as of December 31, 1993. Mr. Prince is the only named executive officer with accruals under this plan.

 

The benefit under the Travelers SERP is equal to the lesser of (a) or (b), but in either case, reduced by an offset for benefits under the Citigroup Pension Plan, Social Security benefits, and any other Citi qualified or nonqualified retirement plan benefits. For this purpose, (a) equals (i) 1.7 percent times


 

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final average pay times years of service prior to attaining age 50 plus (ii) 2.7 percent times final average pay times years of service on or after attaining age 50, and (b) equals 55 percent of final average pay.

 

Under the Travelers SERP, final average pay is defined as the average of the monthly salary during the 60 consecutive months that produce the highest monthly average during the last 120 months, taking into account periods before January 1, 1994. Eligible compensation includes base pay, shift differentials, commissions earned, and annual incentive bonuses (before deferrals into other plans), and excludes income attributable to stock options, reimbursements, expense allowances, cash and non-cash fringe benefits, moving expenses, severance pay, vacation pay, deferred compensation payouts, welfare benefits, and sign-on bonuses.

 

The normal retirement date under the Travelers SERP is age 65. The early retirement date is either (a) attainment of age 55 with 10 years of service while actively employed or (b) for participants who entered the plan on January 1, 1990, the attainment of age 60 with five years of service while actively employed. Mr. Prince is vested and eligible for early retirement under the terms of this plan.

 

Participants who terminate when they are eligible for early retirement may immediately commence benefits, and benefits are not reduced for commencement at age 62 or later. Benefits commencing before age 62 are reduced 0.5 percent for each month of commencement before age 62, and no offset for Social Security is applied before age 62. Participants who terminate with a vested benefit before early retirement may commence benefits immediately but their benefits will be reduced by 0.5 percent for each month of

commencement before normal retirement date. The Travelers SERP offers the same optional forms as the Citigroup Pension Plan on the same actuarially equivalent basis, except that no lump sums are available under the Travelers SERP.

 

RBS Section of PLAS.    Sir Winfried is a participant in the Citigroup Global Markets Limited Pension and Life Assurance Scheme (PLAS), RBS section. The purpose of PLAS, a broad-based retirement plan qualified under U.K. tax law, is to provide retirement income on a tax-deferred basis to U.K. employees. PLAS, including the RBS section, is closed to new members.

 

The RBS section of PLAS is a defined benefit pension plan designed to provide a pension on retirement generally equal to two-thirds of a participant’s final annual base pay for those participants who retire at age 60 after 20 or more years of service. Normal retirement age under the plan is age 60. Benefits are payable in annuity form with the option to commute part of the benefit to a lump sum; all optional forms of benefit are actuarially equivalent. The plan also provides benefits for dependents upon the participant’s death either before or after retirement.

 

With the agreement of Citi, participants may retire early after the age of 50. Early retirement benefits are based on final annual base pay and service at the date of retirement, reduced for early commencement. The reduction factor is 1.5 percent for each year of early commencement between ages 55 and 60 and 3 percent for each year of early commencement between the ages 50 and 55.

 

Because he is past normal retirement age, Sir Winfried is no longer accruing pension benefits under the RBS section of PLAS, but receives actuarial increases to his benefit for late commencement.


 

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This excerpt taken from the C DEF 14A filed Mar 13, 2007.

Pension Benefits

 

Name    Plan Name   

Number

of Years
Credited

Service

(#)

  

Present

Value of
Accumulated

Benefit

($)

  

Payments

During Last

Fiscal Year

($)

Charles Prince

  

The Citigroup Pension Plan

Travelers RBEP

Travelers SERP

   27.92
22.92
14.92
   $
$
$
190,065
242,096
1,307,693
   $
$
$
0
0
0

Sallie Krawcheck

  

The Citigroup Pension Plan

   4.25    $ 20,694    $ 0

Robert E. Rubin

  

The Citigroup Pension Plan

Travelers RBEP

   7.17
2.17
   $
$
71,389
34,819
   $
$
0
0

Robert Druskin

  

The Citigroup Pension Plan

Travelers RBEP

   15.67
10.67
   $
$
204,563
71,622
   $
$
0
0

Stephen Volk

  

The Citigroup Pension Plan

   2.42    $ 19,775    $ 0

 

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All material assumptions used in developing benefit estimates in the Pension Benefits Table are included in Footnote 9 to the Consolidated Financial Statements of Citigroup Inc. and its subsidiaries, as filed with the SEC on Form 10-K for 2006.

 

Citigroup’s current general policy on pension plans is that executives should accrue retirement benefits on the same basis available to Citigroup employees generally under Citigroup’s broad-based, tax-qualified retirement plans. This approach reflects Citigroup’s senior executive compensation principles, which generally provide that most compensation for senior executives should be based on performance.

 

Citigroup has not granted extra years of credited service under any retirement plan to the named executive officers. As shown in the Pension Benefits Table, Mr. Prince, Mr. Rubin, and Mr. Druskin have fewer years of credited service under the nonqualified pension plans than under the qualified pension plan. Future accruals under the nonqualified plans ceased for the executives while they continued to earn benefits under the qualified plan on the same basis as other U.S. employees.

 

The following describes the pension plans listed in the Pension Benefits Table under which the named executive officers have accrued benefits:

 

The Citigroup Pension Plan.    The purpose of this broad-based, tax-qualified retirement plan is to provide retirement income on a tax-deferred basis to all U.S. employees. Effective January 1, 2002, this plan adopted a single cash balance benefit formula for most of the covered population, including the named executive officers. This benefit is expressed in the form of a hypothetical account balance. Benefit credits accrue annually at a rate between 1.5% and 6% of eligible compensation; the rate increases with age and service. Interest credits are applied annually to the prior year’s balance; these credits are based on the yield on 30-year Treasury bonds (as published by the Internal Revenue Service). Employees become eligible to participate in the Citigroup Pension Plan after one year of service, and benefits generally vest after five years of service.

 

Eligible compensation generally includes base salary and wages, plus shift differential and overtime (including any before-tax contributions to a 401(k) plan or other benefit plans), incentive awards paid in cash during such year including any amount payable for such year but deferred under a deferred compensation agreement, commissions paid during such year, any incentive bonus or commission granted during such year in the form of restricted stock and/or stock options under core CAP, but excluding compensation payable after termination of employment, sign-on and retention bonuses, severance pay, cash and non-cash fringe benefits, reimbursements, tuition benefits, payment for unused vacation, any amount attributable to the exercise of a stock option, or attributable to the vesting of, or an 83(b) election with respect to, an award of restricted stock, moving expenses, welfare benefits, and payouts of deferred compensation. Annual eligible compensation was limited by Internal Revenue Service rules to $220,000 for 2006.

 

The normal form of benefit under the Citigroup Pension Plan is a joint and survivor annuity for married participants (payable over the life of the participant and spouse) and a single life annuity for single participants (payable for the participant’s life only). Although the normal form of the benefit is an annuity, the hypothetical account balance is also payable as a single lump sum, at the election of the participant. The Citigroup Pension Plan’s normal retirement age is age 65. All optional forms of benefit under this formula available to the named executive officers are actuarially equivalent to the normal form of benefit. Benefits are eligible for commencement under the plan upon termination of employment at any age, so there is no separate eligibility for early retirement.

 

Pension accruals prior to January 1, 2002 were determined under different formulas depending upon a given employee’s specific employment history with Citigroup. All accruals before 2002 for the named executive officers were under cash balance formulas, which provided for a range of benefit credits increasing with age and years of service, and interest credit rates that were


 

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substantially the same as the current interest rate. The current interest credit rate applies to the participant’s entire account balance.

 

Travelers RBEP.    The purpose of the Travelers Retirement Benefits Equalization Plan (the “Travelers RBEP”), a nonqualified retirement plan, was to provide retirement benefits using the applicable Citigroup Pension Plan benefit formula, but based on the Citigroup Pension Plan’s definition of (a) compensation, in excess of the Internal Revenue Code qualified plan compensation limit ($170,000 for 2001), or (b) benefits, in excess of the Internal Revenue Code qualified plan benefit limit ($140,000 for 2001). In 1994, the Travelers RBEP was amended to limit qualifying compensation under the plan to $300,000 and was further amended in 2001 to cease benefit accruals after 2001 for most participants (including the named executive officers). Mr. Prince, Mr. Rubin and Mr. Druskin are the only named executive officers with accruals under this plan.

 

All other terms of the Travelers RBEP are the same as under the Citigroup Pension Plan, including definitions of eligible compensation and normal retirement age. The optional forms of benefit available under this plan and their equivalent values are the same as those under the Citigroup Pension Plan.

 

Travelers SERP.    The purpose of the Travelers Supplemental Retirement Plan (the “Travelers SERP”), a nonqualified retirement plan, was to provide additional retirement benefits to certain executives. Accruals were frozen as of December 31, 1993. Mr. Prince is the only named executive officer with accruals under this plan.

 

The benefit under the Travelers SERP is equal to the lesser of (a) or (b), but in either case, reduced by an offset for benefits under the Citigroup Pension Plan, Social Security benefits, and any other Citigroup qualified or nonqualified retirement plan benefits. For this purpose, (a) equals (i) 1.7% times final average pay times years of service prior to

attaining age 50 plus (ii) 2.7% times final average pay times years of service on or after attaining age 50, and (b) equals 55% of final average pay.

 

Under the Travelers SERP, final average pay is defined as the average of the monthly salary during the 60 consecutive months that produce the highest monthly average during the last 120 months, taking into account periods before January 1, 1994. Eligible compensation includes base pay, shift differentials, commissions earned, and annual incentive bonuses (before deferrals into other plans), and excludes income attributable to stock options, reimbursements, expense allowances, cash and non-cash fringe benefits, moving expenses, severance pay, vacation pay, deferred compensation payouts, welfare benefits, and sign-on bonuses.

 

The normal retirement date under the Travelers SERP is age 65. The early retirement date is either (a) attainment of age 55 with 10 years of service while actively employed or (b) for participants who entered the plan on January 1, 1990, the attainment of age 60 with five years of service while actively employed. Mr. Prince is vested and eligible for early retirement under the terms of this plan.

 

Participants who terminate when they are eligible for early retirement may immediately commence benefits, and benefits are not reduced for commencement at age 62 or later. Benefits commencing before age 62 are reduced 0.5% for each month of commencement before age 62, and no offset for Social Security is applied before age 62. Participants who terminate with a vested benefit before early retirement may commence benefits immediately but their benefits will be reduced by 0.5% for each month of commencement before normal retirement date. The Travelers SERP offers the same optional forms as the Citigroup Pension Plan on the same actuarially equivalent basis, except that no lump sums are available under the Travelers SERP.

 

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