HSBC 2012 Annual Report Download - page 419

417
Overview Operating & Financial Review Corporate Governance Financial Statements Shareholder Information
Post-employment defined benefit plans’ principal actuarial financial assumptions
The principal actuarial financial assumptions used to calculate the Group’s obligations for the largest defined benefit
pension plans at 31 December for each period, and used as the basis for measuring periodic costs under the plans in
the following periods, were as follows:
Principal actuarial assumptions
Discount
rate
Inflation
rate
Rate of
increase for
pensions
Rate
of pay
increase
% % % %
At 31 December 2012
UK1 ............................................................................................... 4.50 3.10 2.90 3.60
Hong Kong ................................................................................... 0.60 n/a n/a 4.00
US ................................................................................................. 3.95 2.50 n/a 2.75
At 31 December 2011
UK1 ............................................................................................... 4.80 3.20 3.10 3.70
Hong Kong ................................................................................... 1.47 n/a n/a 5.00
US ................................................................................................. 4.60 2.50 n/a 2.75
At 31 December 2010
UK1 ............................................................................................... 5.40 3.70 3.50 4.20
Hong Kong ................................................................................... 2.85 n/a n/a 5.00
US ................................................................................................. 5.41 2.50 n/a 2.75
1 Rate of increase for pensions in the UK is for pensions in payment only, capped at 5%. Deferred pensions are projected to increase in
line with the CPI, capped at 5%. For 2010, deferred pensions were projected to increase in line with the RPI, capped at 5%.
HSBC determines the discount rates to be applied to its obligations in consultation with the plans’ local actuaries,
on the basis of current average yields of high quality (AA rated or equivalent) debt instruments, with maturities
consistent with those of the defined benefit obligations. In countries where there is not a deep market in corporate
bonds, government bond yields have been used. The yield curve has been extrapolated where the term of the
liabilities is longer than the duration of available bonds and the discount rate used then takes into account the term
of the liabilities and the shape of the yield curve. When determining the discount rate with reference to a bond index,
an appropriate index for the specific region has been used.
Mortality tables and average life expectancy at age 65
Mortality table
Life expectancy at
age 65 for a male
member currently:
Life expectancy at
age 65 for a female
member currently:
Aged 65 Aged 45 Aged 65 Aged 45
At 31 December 2012
UK ...................................................................... SAPS S11 23.9 25.6 25.4 27.7
Hong Kong2 ....................................................... n/a n/a n/a n/a n/a
US ...................................................................... RP 2000 fully generational3 21.1 23.1 23.2 25.0
At 31 December 2011
UK ...................................................................... SAPS MC4 22.5 24.4 23.5 25.4
Hong Kong2 ....................................................... n/a n/a n/a n/a n/a
US ...................................................................... RP 2000 fully generational3 19.4 20.9 21.3 22.2
1 SAPS S1 with Continuous Mortality Investigation 2011 improvements and a 1.25% long-term allowance improvement. Light table with
1.01 rating for male pensioners and 1.02 rating for female pensioners.
2 The significant plans in Hong Kong are lump sum plans which do not use a post-retirement mortality table.
3 The projections scale applied to the mortality rates has changed from AA at 31 December 2011 to BB at 31 December 2012, to better
reflect observed mortality improvements.
4 SAPS MC projections with 1% minimum improvement beyond 2002. Light table with 1.08 rating for male pensioners and standard table
with 1.06 rating for female pensioners.