Holiday Inn 2008 Annual Report Download - page 88

86 IHG Annual Report and Financial Statements 2008
24 Retirement benefits continued
The combined assets of the principal plans and expected rate of return are:
2008 2007
Long-term Long-term
rate of return rate of return
expected Value expected Value
%$m %$m
UK pension plans
Liability matching investment funds 3.9 192 ––
Equities 7.9 87 7.9 219
Bonds 3.9 140 4.8 360
Other 7.9 18 7.9 32
Total market value of assets 437 611
US pension plans
Equities 9.5 37 9.5 77
Fixed income 5.5 55 5.5 52
Total market value of assets 92 129
The expected rate of return on assets has been determined following advice from the plans’ independent actuaries and is based on
the expected return on each asset class together with consideration of the long-term asset strategy. In conjunction with the Group,
the trustees have recently conducted an asset-liability matching study and this has resulted in the adoption of a revised asset allocation
strategy for the UK plan. This strategy, which was in the process of implementation at 31 December 2008, aims to have 61% of the plan’s
assets invested in liability matching assets and 39% in return seeking assets.
History of experience gains and losses
2008 2007 2006 2005 2004
$m $m $m $m $m
UK pension plans
Fair value of plan assets 437 611 527 431 907
Present value of benefit obligations (411) (597) (585) (473) (1,158)
Surplus/(deficit) in the plans 26 14 (58) (42) (251)
Experience adjustments arising on plan liabilities 55 31 (22) (122) (109)
Experience adjustments arising on plan assets (57) (6) 13 86 26
US and other pension plans
Fair value of plan assets 112 144 111 106 107
Present value of benefit obligations (185) (184) (175) (176) (172)
Deficit in the plans (73) (40) (64) (70) (65)
Experience adjustments arising on plan liabilities 3– – (5) (11)
Experience adjustments arising on plan assets (38) – 4 (2) 2
US post-employment benefits
Present value of benefit obligations (19) (20) (19) (20) (21)
Experience adjustments arising on plan liabilities 1–11(1)
The cumulative amount of actuarial gains and losses recognised since 1 January 2004 in the Group statement of recognised income and
expense is $150m (2007 $114m). The Group is unable to determine how much of the pension scheme deficit recognised on transition to
IFRS of $298m and taken directly to total equity is attributable to actuarial gains and losses since inception of the schemes. Therefore,
the Group is unable to determine the amount of actuarial gains and losses that would have been recognised in the Group statement
of recognised income and expense before 1 January 2004.
Post balance sheet event
Subsequent to the year end, approval was given for the payment of enhanced pension transfers to those deferred members of the
InterContinental Hotels UK Pension Plan who had accepted an offer to receive the enhancement either as a cash lump sum or as an
additional transfer value to an alternative pension provider. The payments, comprising lump sum amounts of £5.8m and additional
contributions of £4.2m, were made by the Company on 23 January 2009. The transfer values subsequently paid by the plan were £45m and
the corresponding IAS 19 liability extinguished was £38m. The settlement loss arising, together with the lump sum payment and costs
of arrangement, will be charged to the Group income statement as an exceptional item, estimated at $22m, in the first quarter of 2009.
Notes to the Group financial statements continued