Barclays 2010 Annual Report Download - page 232

Notes to the financial statements
For the year ended 31st December 2010 continued
28 Retirement benefit obligations continued
2010 2009 2008
Pensions
£m
Other post-
retirement
benefits
£m
Total
£m
Pensions
£m
Other post-
retirement
benefitsa
£m
Total
£m
Pensions
£m
Other post-
retirement
benefits
£m
Total
£m
Current service cost 343 6 349 281 10 291 299 2 301
Interest cost 1,137 9 1,146 992 9 1,001 991 8 999
Expected return on scheme assets (1,122) – (1,122) (935) – (935) (1,175) – (1,175)
Recognised actuarial (gain)/loss 72 3 75 96 – 96 (23) (1) (24)
Past service cost (233) – (233) 6 – 6 2 (8) (6)
Curtailment or settlements 16 – 16 (473) – (473) (5) – (5)
Total income statement charge 213 18 231 (33) 19 (14) 89 1 90
The Group’s IAS 19 pension deficit in respect of the UKRF as at 31st December 2010 was £2,552m (2009: £3,534m). The reduction in the deficit
resulted principally from better than expected asset performance, contributions paid in excess of the pension expense and a credit to past service costs
following amendments to the treatment of minimum defined benefits.
During 2009, the Trust Deed was amended such that with effect from 1st April 2010, the defined benefit sections within the UKRF were closed to the
accrual of future pension benefits. From that date members were eligible to accrue future service pension benefits in either Afterwork or PIP. This gave
rise to the recognition in 2009 of a curtailment gain of £487m, actuarial losses of £79m and an additional cost of £37m included in other staff costs.
Out of the benefit obligations of £21,801m (2009: £20,646m), £258m (2009: £288m) were wholly unfunded.
Assumptions
The benefit obligations arising under the Group’s defined benefit schemes are actuarially valued using the projected unit credit method.
Principal assumptions UK schemes Overseas schemes
2010
% p.a.
2009
% p.a.
2010
% p.a.
2009
% p.a.
Discount rate 5.31 5.61 6.94 7.53
Rate of increase in salaries 4.00 4.26 5.26 5.49
Inflation rate 3.50 3.76 3.63 3.78
Rate of increase for pensions in payment 3.35 3.56 3.08 3.27
Rate of increase for pensions in deferment 3.50 3.76 2.86 2.81
Afterwork revaluation rate 3.97 4.17 n/a n/a
Initial health care inflation 6.50 7.00 8.00 8.50
Long-term health care inflation 5.00 5.00 5.00 5.00
Expected return on plan assets 6.30 6.70 6.79 7.44
The expected return on plan assets assumption is weighted on the basis of the fair value of these assets. Health care inflation assumptions are
weighted on the basis of the health care cost for the period. All other assumptions are weighted on the basis of the defined benefit obligation at
the end of the period.
The UK scheme discount rate assumption is based on a liability-weighted rate derived from an AA corporate bond yield curve. The overseas health care
inflation assumptions relate to the US.
Note
a Includes £3m relating to discontinued operations.
230 Barclays PLC Annual Report 2010 www.barclays.com/annualreport10