Barclays 2014 Annual Report Download - page 326

324 I Barclays PLC Annual Report 2014 barclays.com/annualreport
Notes to the financial statements
Employee benefits
35 Pensions and post retirement benefits continued
Income statement charge
2014
£m
2013
£m
2012
£m
Current service cost 324 371 410
Net finance cost/(income) 78 55 (10)
Past service cost (5) 4 (33)
Settlements (15) (3) (12)
Total 382 427 355
Balance sheet reconciliation
2014 2013
Total
£m
Of which
relates to
UKRF
£m
Total
£m
Of which
relates to
UKRF
£m
Benefit obligation at beginning of the year (27,568) (25,093) (26,304) (23,643)
Current service cost (324) (258) (371) (280)
Interest costs on scheme liabilities (1,261) (1,101) (1,145) (1,003)
Past service cost 5 2 (4) –
Settlements 83 – 44 –
Remeasurement loss – financial (2,493) (2,382) (989) (997)
Remeasurement loss – demographic (370) (340) 4 –
Remeasurement loss – experience 407 418 (39) 31
Employee contributions (35) (2) (39) (1)
Benefits paid 999 825 905 799
Exchange and other movements 165 – 370 1
Benefit obligation at end of the year (30,392) (27,931) (27,568) (25,093)
Fair value of scheme assets at beginning of the year 25,743 23,661 25,075 22,845
Interest income on scheme assets 1,183 1,042 1,090 974
Employer contribution 347 241 364 238
Settlements (68) – (41) –
Remeasurement – return on plan assets greater than discount rate 2,736 2,705 575 400
Employee contributions 35 2 39 1
Benefits paid (999) (825) (905) (799)
Exchange and other movements (103) 1 (454) 2
Fair value of scheme assets at the end of the year 28,874 26,827 25,743 23,661
Net deficit (1,518) (1,104) (1,825) (1,432)
Retirement benefit assets 56 – 133 –
Retirement benefit liabilities (1,574) (1,104) (1,958) (1,432)
Net retirement benefit liabilities (1,518) (1,104) (1,825) (1,432)
Included within the benefit obligation was £2,272m (2013: £2,314m) relating to overseas pensions and £189m (2013: £161m) relating to other
post-employment benefits. Of the total benefit obligation of £30,392m (2013: £27,568m), £286m (2013: £298m) was wholly unfunded.
As at 31 December 2014, the UKRF’s scheme assets were in deficit versus IAS 19R obligations by £1,104m (2013: deficit of £1,432m). The decrease
in the net deficit was driven by a rise in asset values, with the increase in liabilities arising from the decrease in the discount rate partly offset by a
decrease in the long term RPI inflation rate.
Critical accounting estimates and judgements
Actuarial valuation of the schemes’ obligation is dependent upon a series of assumptions, below is a summary of the main financial and
demographic assumptions adopted for UKRF.
UKRF financial assumptions
2014
% p.a.
2013
% p.a.
Discount rate 3.67 4.46
Inflation rate 3.05 3.42
Rate of increase in salaries 2.55 2.92
Rate of increase for pensions in payment 2.98 3.32
Rate of increase for pensions in deferment 2.98 3.32
Afterwork revaluation rate 3.35 3.70
The UKRF discount rate assumptions for 2014 and 2013 are taken based on the single equivalent discount rate implied by the Towers Watson
RATE Link model.