Holiday Inn 2012 Annual Report Download - page 121

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OVERVIEW BUSINESS REVIEW GOVERNANCE
GROUP FINANCIAL
STATEMENTS
PARENT COMPANY
FINANCIAL STATEMENTS OTHER INFORMATION
Notes to the Group Financial Statements 119
25. Retirement benefits continued
The assets and liabilities of the schemes and the amounts recognised in the Group statement of financial position are:
Pension plans
Post-employment
UK US and other benefits Total
2012 2011 2012 2011 2012 2011 2012 2011
$m $m $m $m $m $m $m $m
Retirement benefit assets
Fair value of plan assets 695 551 17 16 – – 712 567
Present value of benefit obligations (507) (471) (15) (12) – – (522) (483)
Surplus in schemes 188 80 2 4 – – 190 84
Asset restriction and liability in respect
of funding commitments* (91) (63) – – – – (91) (63)
Total retirement benefit assets 97 17 2 4 – – 99 21
Retirement benefit obligations
Fair value of plan assets – – 132 117 – – 132 117
Present value of benefit obligations (62) (54) (232) (221) (25) (30) (319) (305)
Total retirement benefit obligations (62) (54) (100) (104) (25) (30) (187) (188)
Total fair value of plan assets 695 551 149 133 – – 844 684
Total present value of benefit obligations (569) (525) (247) (233) (25) (30) (841) (788)
* Relates to tax that would be deducted at source in respect of a refund of the surplus taking into account amounts payable under funding commitments.
The ‘US and other’ surplus of $2m (2011 $4m) relates to a defined benefit pension scheme in Hong Kong. Included within the ‘US and other’
deficit is $2m (2011 $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
2012 2011 2012 2011 2012 2011
% % % % % %
Wages and salaries increases 4.5 4.6 – – 4.0 4.0
Pensions increases 3.0 3.1 – – – –
Discount rate 4.5 4.7 3.5 4.1 3.5 4.1
Inflation rate 3.0 3.1 – – – –
Healthcare cost trend rate assumed for next year:
Pre 65 (ultimate rate reached in 2021) 9.0 9.5
Post 65 (ultimate rate reached in 2024) 11.8 12.8
Ultimate rate that the cost trend rate trends to 5.0 5.0
Mortality is the most significant demographic assumption. The current assumptions for the UK plan are based on the S1NA tables with long
cohort projections and a 1.25% per annum underpin to future mortality improvements with age rated down by 1.75 years for pensioners and
1.5 years for non-pensioners. In the US, the current assumptions are based on the RP-2000 IRS PPA @ 2013 Non-Annuitant/Annuitant
healthy tables for males and females.
Accordingly, assumed life expectancy at retirement age is as follows:
Pension plans
UK US
2012 2011 2012 2011
Years Years Years Years
Current pensioners at 65a – male 24 24 19 19
– female 27 27 21 21
Future pensioners at 65b – male 27 26 21 21
– female 30 29 22 22
a Relates to assumptions based on longevity (in years) following retirement at the end of the reporting period.
b Relates to assumptions based on longevity (in years) relating to an employee retiring in 2032.
The assumptions allow for expected increases in longevity.