Strategic Report
35
Governance
Financial
121
Retirement benefit schemes
Assumptions Group scheme
Other schemes
2014 %
2013 %
2014 %
2013 %
Discount rate
4.50
4.50
4.50
4.50
Expected rate of salary increases
2.00
3.90
2.00
3.90
Retail Price Inflation
3.40
3.40
3.40
3.40
Consumer Price Inflation
2.40
2.40
2.40
2.40
Future pension increases
3.40
3.40
3.40
3.40
Key assumptions used for IAS 19 valuation:
Group scheme 2014 Years
2013 Years
Current pensioners at 65 – male
88.0
88.0
Current pensioners at 65 – female
89.0
89.0
Future pensioners at 65 – male
89.0
89.0
Future pensioners at 65 – female
91.0
91.0
Post retirement life expectancy:
Life expectancy for the other schemes is that used by the relevant scheme actuary. The overall expected return on assets is calculated as the weighted average of the expected return of each asset class. The expected return on equities is the sum of dividend growth and capital growth net of investment expenses. The return on gilts and bonds is the current market yield on long-term bonds. The expected return on property has been set equal to that expected on equities less a margin. The expected return on other assets is the rate earned by the scheme on cash and alternate assets. The sensitivity of defined benefit obligations to changes in principal actuarial assumptions is shown in Note 2. Amounts recognised in the income statement in respect of these defined benefit schemes are as follows: 20131
2014 Group scheme Other schemes £m £m
Current service cost
(3.6)
Total administration expense
(0.4)
Past service cost
10.5
(0.4)
Total £m
Group scheme £m
Total £m
(4.0)
(3.8)
–
(0.4)
(0.5)
–
(0.5)
–
10.5
–
–
–
Amounts recognised in operating profit
6.5
(0.4)
6.1
(4.3)
Net interest cost
(1.3)
(0.1)
(1.4)
(0.8)
Amounts recognised in profit before tax
5.2
(0.5)
4.7
(5.1)
Note: 1 Restated following amendments to IAS 19, as described in Note 1.
Other schemes £m
(0.3)
(0.3) – (0.3)
(4.1)
(4.6) (0.8) (5.4)