Pensions

The Group's UK pensions schemes are funded, registered schemes and were approved under the regime applying until April 6, 2006. They are defined benefit pension schemes providing, at retirement, a pension of up to two thirds of final remuneration, subject to HM Revenue & Customs limits. Andrew Shilston is a current member of the Group's UK pension scheme. Colin Smith and Mike Terrett have opted out of future pension accrual with effect from April 1, 2006. Sir John Rose opted out of future pension accrual with effect from February 1, 2008, see note 6 below.

Details of the pension benefits, which accrued over the year in the Group’s registered UK defined benefit pension schemes¹, are given below:

	Increase in accrued pension during the year ended Dec 31, 2008 2 £000pa		Total accrued pension entitlement at the year ended Dec 31, 2008 3 £000pa	Transfer value of accrued pension as at Dec 31, 2008 4 £000	Transfer value as at Dec 31, 2007 of accrued pension at that date 4 £000	Increase in transfer value over 2008 net of the member’s own contributions 5 £000
Sir John Rose6	10	(8)	449	10,632	11,225	–598	(191)
Andrew Shilston7	2	(2)	12	307	259	203	(49)
Colin Smith8	43	(36)	241	3,847	4,160	–313	(259)
Mike Terrett8	22	(13)	250	5,230	4,885	345	(269)

James Guyette participates in pension plans sponsored by Rolls-Royce North America Inc.

Details of the retirement benefits, which accrued over the year in the defined benefit plans sponsored by Rolls-Royce North America Inc., are given below:

	Increase in accrued retirement lump sum during the year ended Dec 31, 2008 2 £000pa		Total accrued retirement lump sum entitlement at the year ended Dec 31, 2008 9 £000pa	Transfer value of accrued retirement lump sum as at Dec 31, 2008 10 £000	Transfer value as at Dec 31, 2007 of accrued retirement lump sum at that date 10 £000	Increase in transfer value over 2008 net of themember’s own contributions 5 £000
James Guyette11,12	91	(66)	711	711	620	487	(462)

¹Members of the schemes have the option to pay Additional Voluntary Contributions. Neither the contributions nor the resulting benefits are included in the above table.

²The figure in brackets is the increase in pension/retirement lump sum during the year ended December 31, 2008 but, in this case, excluding the effect of inflation.

³The pension entitlement shown is that which would be paid annually on retirement, based on service to the end of the year, or to April 1, 2006 for members with enhanced protection from ‘A’ day.

⁴The transfer values stated represent liabilities of the Rolls-Royce sponsored pension schemes and are not sums paid to the individuals. The transfer values of the accrued pensions as at December 31, 2007 have been calculated on the basis of actuarial advice in accordance with Actuarial Guidance Note GN11 (GN11). GN11 covers individual transfer calculations and the above figures have been calculated using assumptions certified by the Actuaries as being consistent with GN11. The transfer values of the accrued pensions as at December 31, 2008 have been calculated on a basis adopted by the trustees on October 6, 2008 following receipt of actuarial advice for transfer values.

⁵The figure in brackets is the transfer value of the increase in pension/retirement lump sum during the year ended December 31, 2008 excluding the effect of inflation and net of the member’s own contributions.

⁶Sir John Rose started to receive his pension from February 1, 2008. Sir John Rose is not accruing any further benefit or allowance in lieu of pension benefit from his ongoing employment with the Group. The total accrued pension entitlement at December 31, 2008 is after allowance for reduction for early payment of pension and taking a part of his pension as lump sum. The transfer value is the value of benefits in payment as at December 31, 2008 increased by cash taken on retirement.

⁷The Group operates the Rolls-Royce Supplementary Retirement Scheme. The purpose of the Scheme is to fund pension provision above the pensionable earnings cap which was imposed on approved pension schemes by the 1989 Finance Act. Membership of the Scheme is restricted to executive directors and to a limited number of senior executives. Andrew Shilston is a member of this Scheme. He joined the Group after the introduction of the earnings cap and his terms and conditions on joining included a commitment to provide pension and life cover based on total salary. Employer contributions to the Scheme during 2008 have been added to the increase in transfer value over 2008 for the registered defined benefit plans, and are therefore included in the figures shown in the right hand column of the first table.

⁸Colin Smith and Mike Terrett receive a cash allowance in lieu of future pension accrual. Had they elected to continue to accrue pension the estimated cost of that accrual would be higher than the cash allowance to be paid in lieu.

⁹The lump sum entitlement shown is that which would be paid on immediate retirement based on service to the end of the year.

¹⁰The transfer values have been calculated on the basis of actuarial advice.

¹¹Benefits are translated at US$ = £1.438.

¹²James Guyette is a member of two defined benefit plans in the US, one qualified and one non-qualified. He accrues a retirement lump sum benefit in both of these plans. The aggregate value of the retirement lump sums accrued in these two plans, and the transfer values of these benefits, are shown in the second table. In addition, James Guyette is a member of two 401(K) Savings Plans in the US, one qualified and one non-qualified, to which both he and his employer, Rolls-Royce North America Inc., contribute. James Guyette is also a member of an unfunded non-qualified deferred compensation plan in the US, to which his employer makes notional contributions. Employer contributions to these three plans during 2008 have been added to the increase in transfer value over 2008 for the defined benefit plans, and are therefore included in the figures shown in the right hand column of the second table.