Holiday Inn 2005 Annual Report Download - page 64

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23 EMPLOYEE BENEFITS (CONTINUED)
The principal assumptions used by the actuaries to determine the benefit obligation were:
Pension plans Post-employment
UK US benefits
2005 2004 2005 2004 2005 2004
%%%%%%
Wages and salaries increases 4.3 4.3 ––4.0 4.0
Pensions increases 2.8 2.8 ––––
Discount rate 4.7 5.3 5.5 5.8 5.5 5.8
Inflation rate 2.8 2.8 ––––
Healthcare cost trend rate assumed for next year 9.0 9.5
Ultimate rate that the cost trend rate trends to 4.5 4.5
In 2015 the healthcare cost trend rate reaches the assumed ultimate rate. A one per cent point increase/(decrease) in assumed healthcare
costs trend rate would increase/(decrease) the accumulated post-employment benefit obligations as of 31 December 2005 and 2004, by
approximately £1m, and would increase/(decrease) the total of the service and interest cost components of net post-employment
healthcare cost for the period then ended by approximately £nil.
Pension plans
UK US
Post-retirement mortality (years) 2005 2004 2005 2004
Current pensioners at 65 – malea21 21 17 17
Current pensioners at 65 – femalea24 24 22 22
Future pensioners at 65 – maleb22 22 17 17
Future pensioners at 65 – femaleb25 25 22 22
a Relates to assumptions based on longevity (in years) following retirement at the balance sheet date.
b Relates to assumptions based on longevity (in years) relating to an employee retiring in 2020.
The post-mortality assumptions allow for expected increases in longevity.
Pension plans Post-employment
UK US benefits Total
2005 2004 2005 2004 2005 2004 2005 2004
Movement in benefit obligation £m £m £m £m £m £m £m £m
Benefit obligation at beginning of year 600 477 88 90 11 11 699 578
Current service cost 19 18 ––––19 18
Past service cost –1–––––1
Members’ contributions 22––––22
Interest expense 30 27 651137 33
Benefits paid (11) (12) (6) (5) (1) (1) (18) (18)
Plan curtailment (7) –––––(7) –
Deficit transferred in respect
of previous acquisition –27 –––––27
Actuarial loss/(gain) arising in the year 67 60 35(1) 169 66
Separation of Soft Drinks (426) –––––(426) –
Exchange adjustments ––12 (7) 1(1) 13 (8)
Benefit obligation at end of year 274 600 103 88 11 11 388 699
The defined benefit obligation comprises £328m (2004 £647m) arising from plans that are wholly or partly funded and £60m (2004 £52m)
arising from unfunded plans.
notes to the financial statements
62 InterContinental Hotels Group 2005