C » Topics » Retirement Plans

This excerpt taken from the C DEF 14A filed Mar 14, 2006.

Retirement Plans

 

Except for the retirement benefits provided to the covered executives under the nonqualified pension plans described below and as provided to Sanford Weill under his individual employment agreement as summarized below, the only retirement benefits that are provided to the covered executives are the same benefits available to Citigroup employees generally under Citigroup’s broad-based tax-qualified retirement plans, the Citigroup pension plan and the Citigroup 401(k) plan. Covered executives participate in such plans on the same basis as all other employees of Citigroup.

 

Other than the deferral of the cash portion of Mr. Rubin’s incentive award pursuant to his employment agreement, and cash deferrals made under the Citigroup 401(k) plan, none of the covered executives defer any of their cash compensation.

 

Qualified Pension Plan

U.S. employees are covered by the Citigroup pension plan. Effective January 1, 2002, this plan adopted a single cash balance benefit formula for most of the covered population, including the covered executives. Pension accruals prior to January 1, 2002 were determined under different formulas depending upon a given employee’s specific employment history with Citigroup. Employees become eligible to participate in the Citigroup pension plan after one year of service, and benefits generally vest after 5 years of service. 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). Other forms of payment are also available.

 

The Citigroup cash balance 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). 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.

 

Nonqualified Pension Plans

Citigroup has closed or reduced future accruals under its nonqualified pension plans in stages beginning in 1994. Effective January 1, 2002, Citigroup’s nonqualified pension programs no longer provide accruals for most employees covered by Citigroup’s qualified pension plan, including the covered executives. Citigroup employees are eligible only if they satisfied certain age and service-related conditions at the time accruals under the plans generally ceased.

 

Prior to 2002, Mr. Weill, Mr. Prince, Mr. Druskin, Mr. Rubin and Mr. Willumstad accrued benefits under nonqualified programs that were generally intended to provide (a) retirement benefits based on the qualified pension plan benefit formula using 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 addition to these programs, there is a supplemental retirement plan that provided additional pension benefits to certain employees for service through the end of 1993. Accruals were frozen as of December 31, 1993. Messrs. Weill, Prince and Willumstad participated in this program.

 

Citigroup does not offer “excess 401(k)” or any other nonqualified defined contribution retirement plan to any employee, including the covered executives. Some employees of acquired companies have benefits under frozen nonqualified defined contribution plans, but the covered executives are not entitled to receive any benefits under these plans.

 

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Estimated Annual Benefit Under All Retirement Plans

The estimated annual benefit provided in total by all retirement plans described above, expressed in the form of a single life annuity, is as follows:

 

 

Name (A)  

Years of
Accrual
Service

Through
2005

 

Estimated
Annual

Benefit (B)

 

Sanford I. Weill

  19   $746,089 (C)

Charles Prince

  26   214,109  

Robert Druskin

  14   37,180  

Sallie Krawcheck

  3   39,756  

Robert E. Rubin

  6   7,894  

 

    (A) Mr. Willumstad retired from Citigroup in 2005 with 18 years of service. He received lump sum payments from the pension plans totaling $524,303, and commenced receiving a lifetime benefit of $20,673 annually.

 

    (B) These estimates are based on the following assumptions:

 

  The benefit is determined as of age 65 (or as of January 1, 2006 if older).

 

  Regulatory limits on compensation and benefits, and the Social Security Wage Base remain constant at 2006 levels.

 

  The interest credit rate for cash balance benefits for 2006 (4.5%) remains constant.

 

  The interest rate used to convert hypothetical account balances to annual annuities for 2006 (4.5%) remains constant.

 

  For the three covered executives listed in the above table (Messrs. Prince and Druskin and Ms. Krawcheck) who have not attained normal retirement age, the Estimated Annual Benefit is their projected benefit at normal retirement age (age 65) assuming continuous employment with Citigroup until age 65. The projected value of the cash balance component of their benefit is determined by projecting their hypothetical account balance to normal retirement age using a constant rate of compensation and a constant interest rate.

 

  Because of the decline in the plan’s interest credit rate (from 5.1% in 2005 to 4.5% in 2006), the Estimated Annual Benefit for certain of these covered executives has decreased since 2004.

 

(C) In addition, pursuant to his employment agreement, as described below, Mr. Weill is entitled to receive a supplemental pension benefit equal to a $350,000 annual lifetime annuity for a total pension benefit of approximately $1.1 million per year.

 

This excerpt taken from the C DEF 14A filed Mar 15, 2005.

Retirement Plans

 

Except for the retirement benefits provided to the covered executives under the nonqualified pension plans described below and as provided to Sanford Weill under his individual employment agreement as summarized below, the only retirement benefits that are provided to the covered executives are the same benefits available to Citigroup employees generally under Citigroup’s broad-based tax-qualified retirement plans, the Citigroup pension plan and the Citigroup 401(k) plan. Covered executives participate in such plans on the same basis as all other employees of Citigroup.

 

Other than the deferral of the cash portion of Mr. Rubin’s incentive award and cash deferrals made under the Citigroup 401(k) plan, none of the covered executives defer any of their cash compensation. Citigroup does not provide accruals to any non-qualified pension programs and has not done so since 2001. Mr. Weill, Mr. Prince and Mr. Willumstad participated in a supplemental retirement plan that was frozen as of December 31, 1993.

 

Qualified Pension Plan

 

U.S. employees are covered by the Citigroup pension plan. Effective January 1, 2002, this plan adopted a single cash balance benefit formula for most of the covered population, including the covered executives. Pension accruals prior to January 1, 2002 were determined under different formulas depending upon a given employee’s specific employment history with Citigroup. Employees become eligible to participate in the Citigroup pension plan after one year of service, and benefits generally vest after 5 years of service. 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). Other forms of payment are also available.

 

The Citigroup cash balance 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). 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.

 

Nonqualified Pension Plans

 

Effective January 1, 2002, Citigroup’s nonqualified pension programs no longer provide accruals for most employees covered by Citigroup’s qualified pension plan, including the covered executives. Prior to 2002, these nonqualified programs provided retirement benefits for compensation in excess of the IRC compensation limit ($210,000 for 2005), or in respect of benefits accrued in excess of the IRC benefit limit ($170,000 for 2005).

 

In addition to these programs, there is a supplemental retirement plan that provided additional pension benefits to certain employees for service through the end of 1993. Accruals were frozen as of December 31, 1993. Sanford Weill, Charles Prince and Robert Willumstad participated in this program.

 

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Table of Contents

Estimated Annual Benefit Under All Retirement Plans

 

The estimated annual benefit provided in total by all retirement plans described above, expressed in the form of a single life annuity, is as follows:

 

 

Name  

Years of
Accrual
Service

Through
2004

 

Estimated
Annual

Benefit (A)

 

Sanford I. Weill

  18   $731,930 (B)

Charles Prince

  25   220,249  

Robert Druskin

  13   40,018  

Robert E. Rubin

    5   7,120  

Robert B. Willumstad

  17   86,874  

 

    (A) These estimates are based on the following assumptions:

 

  The benefit is determined as of age 65 (or as of January 1, 2005 if older);

 

  Covered compensation for each covered executive remains constant at 2005 levels;

 

  Regulatory limits on compensation and benefits, and the Social Security Wage Base remain constant at 2005 levels;

 

  The interest credit rate for cash balance benefits for 2005 (5.1%) remains constant; and

 

  The interest rate used to convert hypothetical account balances to annual annuities for 2005 (5.1%) remains constant.

 

  For the three covered executives (Messrs. Prince, Druskin and Willumstad) who have not attained normal retirement age, the Estimated Annual Benefit is their projected benefit at normal retirement age. The projected value of the cash balance component of their benefit is determined by projecting their hypothetical account balance to normal retirement age using a constant interest rate. Because of the decline in the plan’s interest credit rate (from 5.3% in 2004 to 5.1% in 2005), the Estimated Annual Benefit for these covered executives has also decreased.

 

    (B) In addition, pursuant to his employment agreement, as described below, Sanford Weill is entitled to receive a supplemental pension benefit equal to a $350,000 annual lifetime annuity.

 

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