HSBC 2011 Annual Report Download - page 323

321
Overview Operating & Financial Review Corporate Governance Financial Statements Shareholder Information
Defined benefit pension plans
Net asset/(liability) under defined benefit pension plans
HSBC Bank (UK) Pension Scheme Other plans
2011 2010 2011 2010
US$m US$m US$m US$m
Fair value of plan assets
At 1 January .................................................................................. 22,236 17,701 7,559 6,822
Expected return on plan assets ..................................................... 1,325 1,092 481 437
Contributions by HSBC ................................................................ 600 2,890 565 422
– normal .................................................................................... 314 252 176 194
– special .................................................................................... 286 2,638 389 228
Contributions by employees ......................................................... 34 23 22 17
Experience gains ........................................................................... 3,426 1,772 200 394
Benefits paid ................................................................................. (803) (744) (495) (440)
Transfers ....................................................................................... – 136 – (136)
Assets distributed on curtailments ................................................ – – – (7)
Assets distributed on settlements ................................................. – – (25) (10)
Exchange differences .................................................................... (214) (634) (75) 60
At 31 December ............................................................................ 26,604 22,236 8,232 7,559
Present value of defined benefit obligations
At 1 January .................................................................................. (22,858) (21,523) (9,785) (9,109)
Current service cost ...................................................................... (251) (252) (299) (300)
Interest cost ................................................................................... (1,233) (1,148) (456) (438)
Contributions by employees ......................................................... (34) (23) (22) (17)
Actuarial losses ............................................................................. (1,481) (1,451) (842) (669)
Benefits paid ................................................................................. 804 744 569 518
Past service cost – vested immediately ........................................ 587 – (40) (11)
Past service cost – unvested benefits ............................................ – – 2 (20)
Transfers ....................................................................................... – (136) – 136
Reduction in liabilities resulting from curtailments ..................... – – 59 158
Liabilities extinguished on settlements ........................................ – – 29 12
Exchange differences .................................................................... 99 931 105 (45)
At 31 December ............................................................................ (24,367) (22,858) (10,680) (9,785)
Funded ...................................................................................... (24,367) (22,858) (10,074) (9,241)
Unfunded .................................................................................. ––(606) (544)
Effect of limit on plan surpluses ................................................... – – (18) (47)
Unrecognised past service cost ..................................................... – – 21 28
Net asset/(liability) ....................................................................... 2,237 (622) (2,445) (2,245)
Retirement benefit liabilities recognised in the balance sheet ..... – (622) (2,705) (2,288)
Retirement benefit assets recognised in the balance sheet
(within ‘Other assets’) .............................................................. 2,237 – 260 43
Plan assets of the Group’s pension schemes included US$45m (2010: US$57m) of equities and no bonds (2010:
US$1m) issued by HSBC and US$1,228m (2010: US$1,592m) of other assets placed or transacted with HSBC. The
fair value of plan assets included derivatives entered into with HSBC Bank plc by the HSBC Bank (UK) Pension
Scheme with a positive fair value of US$5,560m at 31 December 2011 (2010: US$2,173m positive fair value) and
US$297m positive fair value (2010: US$77m positive fair value) in respect of the HSBC International Staff
Retirement Benefits Scheme. Further details of these swap arrangements are included in Note 45.
On 17 June 2010, HSBC Bank plc made a £1,760m (US$2,638m) special contribution to accelerate the reduction of
the deficit of the HSBC Bank (UK) Pension Scheme. On the same day the Scheme used the contribution to acquire
debt securities with a fair value of £1,760m (US$2,638m) from HSBC in a transaction at an arm’s length value
determined by the Scheme’s independent third-party advisers. The debt securities sold comprised supra-national,
agency and government-guaranteed securities, asset-backed securities, corporate subordinated debt and auction rate
securities.
In December 2011, HSBC Bank plc made a £184m (US$286m) special contribution to the HSBC Bank (UK) Pension
Scheme. Following the contribution the Scheme purchased asset-backed securities from HSBC at an arm’s length
value, determined by the Scheme’s independent third-party advisers.