Carphone Warehouse 2016 Annual Report Download - page 127

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125
21 Retirement and other post-employment benefit obligations
30 April
2016
£million
2 Ma
y
2015
£million
Retirement benefit obligations – UK 472 486
– Nordics 2 3
474 489
The Group operates a defined benefit and a number of defined contribution schemes. The principal scheme which operates in
the UK includes a funded defined benefit section whose assets are held in a separate trustee administered fund. The scheme is
valued by a qualified actuary at least every three years and contributions are assessed in accordance with the actuary’s advice.
Since 1 September 2002, the defined benefit section of the scheme has been closed to new entrants and on 30 April 2010 was
closed to future accrual with automatic entry into the defined contribution section being offered to those active members of the
defined benefit section at that time. Membership of the defined contribution section is offered to eligible employees.
In the Nordics division, the Group operates small funded secured defined benefit pension schemes, which are also closed
to new entrants, with assets held by a life insurance company as well as an unsecured pension arrangement. In addition,
contributions are made to state pension schemes with defined benefit characteristics.
The defined benefit pension schemes expose the Group to actuarial risks such as longer than expected longevity of members,
lower than expected return on investments and higher than expected inflation, which may increase the liabilities or reduce the
value of assets of the plans.
a) Defined contribution pension schemes
The pension charge in respect of defined contribution schemes was £23 million (2014/15: £20 million).
b) UK Defined benefit pension scheme – actuarial valuation and assumptions
A full actuarial valuation of the scheme was last carried out as at 31 March 2013 and showed a shortfall of assets compared
with liabilities of £373 million. A ‘recovery plan’ based on this valuation was agreed with the Trustee post the Dixons Retail
Merger such that contributions in respect of the scheme year end of 31 March of £35 million were made in 2015/16, rising to
£36 million for 2016/17. Contributions rise to £47 million by 2024/25. The next triennial valuation has commenced and will be
as at 31 March 2016.
The principal actuarial assumptions as at 31 March 2013 were:
Rate per annum
Discount rate for accrued benefits† – Growth portfolio 5.9%
– Matching portfolio 3.8%
Rate of increase to pensions 0% – 3.8%
Inflation 3.4%
† The discount rate is based on a linear de-risking methodology which assumes the Scheme’s investment strategy switches investments from
growth assets (such as equities) to matching assets (such as bonds) over a period of 30 years from 2013 to 2043 so that in 30 years’ time
the asset portfolio is projected to be 80% invested in matching assets.
At 31 March 2013, the market value of the scheme’s investments was £812 million and, based on the above assumptions,
the value of the assets was sufficient to cover 69% of the benefits accrued to members with the liabilities amounting to
£1,185 million.
00_DC 2016 Annual Report.pdf 125 11/07/2016 18:34