Holiday Inn 2015 Annual Report Download - page 134

Download and view the complete annual report

Please find page 134 of the 2015 Holiday Inn annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 184

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173
  • 174
  • 175
  • 176
  • 177
  • 178
  • 179
  • 180
  • 181
  • 182
  • 183
  • 184

Notes to the Group Financial Statements continued
25. Retirement benefits continued
Assumptions
The principal financial assumptions used by the actuaries to determine the benefit obligations are:
Pension plans
UK US
Post-employment
benefits
2015
%
2014
%
2013
%
2015
%
2014
%
2013
%
2015
%
2014
%
2013
%
Pensions increases 3.2 3.3 3.6 ––– –––
Discount rate 4.0 3.7 4.6 3.9 3.6 4.5 3.9 3.7 4.6
Inflation rate 3.2 3.3 3.6 ––– –––
Healthcare cost trend rate assumed for next year:
Pre 65 (ultimate rate reached in 2022) 7.5 8.0 8.5
Post 65 (ultimate rate reached in 2024) 9.0 12.5 17.5
Ultimate rate that the cost trend rate trends to 4.5 5.0 5.2
Mortality is the most significant demographic assumption. The current assumptions for the UK 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 three years for pensioners and non-
pensioners. In the US, the current assumptions are based on the RP-2014 Employee/Healthy Annuitant Generationally Projected with Scale
MP-2015 mortality tables.
In the US, the assumption has been revised during the year to reflect reduced life expectancy at retirement age as follows:
Pension plans
UK US
2015
Years
2014
Years
2013
Years
2015
Years
2014
Years
2013
Years
Current pensioners at 65a – male 26 26 24 21 22 21
– female 29 29 27 23 24 23
Future pensioners at 65b – male 28 28 27 23 23 22
– female 31 31 30 25 25 25
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 2035.
The assumptions allow for expected increases in longevity.
Sensitivities
Changes in assumptions used for determining retirement benefit costs and obligations may have a material impact on the income statement and
the statement of financial position. The key assumptions are the pension increases, discount rate, the rate of inflation and the assumed mortality
rate. The sensitivity analysis below is based on extrapolating reasonable changes in these assumptions, using year-end conditions and assuming
no interdependency between the assumptions.
UK US
Higher/
(lower)
pension cost
$m
Increase/
(decrease)
in liabilities
$m
Higher/
(lower)
pension cost
$m
Increase/
(decrease)
in liabilities
$m
Pensions increases – 0.25% decrease –(1.2) – –
– 0.25% increase –1.2 – –
Discount rate – 0.25% decrease –1.3 –5.9
– 0.25% increase –(1.2) –(5.7)
Inflation rate – 0.25% increase –1.2 – –
– 0.25% decrease –(1.2) – –
Mortality rate – one year increase –0.6 0.38.7
A one percentage point increase in assumed healthcare costs trend rate would increase the accumulated post-employment benefit obligations
as at 31 December 2015 by $2.0m (2014: $2.4m, 2013: $2.8m) and a one percentage point decrease would decrease the obligations by $1.8m
(2014: $2.2m, 2013: $2.3m).
132 IHG Annual Report and Form 20-F 2015