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84 IHG Annual Report and Financial Statements 2008
24 Retirement benefits continued
The assets and liabilities of the schemes and the amounts recognised in the Group balance sheet are:
Pension plans Post-employment
UK US and other benefits Total
2007 2007
2008 restated* 2008 2007 2008 2007 2008 restated*
$m $m $m $m $m $m $m $m
Schemes in surplus
Fair value of plan assets 437 611 16 15 ––453 626
Present value of benefit obligations (377) (550) (13) (10) ––(390) (560)
Surplus in schemes 60 61 35––63 66
Asset restriction** (23) (17) ––––(23) (17)
Retirement benefit assets 37 44 35––40 49
Schemes in deficit
Fair value of plan assets ––96 129 ––96 129
Present value of benefit obligations (34) (47) (172) (174) (19) (20) (225) (241)
Retirement benefit obligations (34) (47) (76) (45) (19) (20) (129) (112)
Total fair value of plan assets 437 611 112 144 ––549 755
Total present value of benefit obligations (411) (597) (185) (184) (19) (20) (615) (801)
* Restated for IFRIC 14 (see page 56).
** Relates to tax that would be deducted at source in respect of a refund of the surplus.
The ‘US and other’ surplus of $3m relates to a defined benefit pension scheme in Hong Kong. Included within the ‘US and other’ deficit
is $1m relating to a defined benefit pension plan in the Netherlands.
Assumptions
The principal financial assumptions used by the actuaries to determine the benefit obligation are:
Pension plans Post-employment
UK US benefits
2008 2007 2008 2007 2008 2007
%%%%%%
Wages and salaries increases 4.5 4.9 ––4.0 4.0
Pensions increases 3.0 3.4 ––––
Discount rate 5.6 5.5 6.2 5.8 6.2 5.8
Inflation rate 3.0 3.4 ––––
Healthcare cost trend rate assumed for next year 9.5 10.0
Ultimate rate that the cost trend rate trends to 5.0 5.0
Mortality is the most significant demographic assumption. In respect of the UK plans, the specific mortality rates used are in line with
the PA92 medium cohort tables, with age rated down by one year, implying the following life expectancies at retirement. In the US,
life expectancy is determined by reference to the RP-2000 healthy tables.
Pension plans
UK US
2008 2007 2008 2007
Years Years Years Years
Current pensioners at 65a– male 23 23 18 18
– female 26 26 20 20
Future pensioners at 65b– male 24 24 18 18
– female 27 27 20 20
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 2028.
The assumptions allow for expected increases in longevity.
Notes to the Group financial statements continued