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67Marks and Spencer Group plc
11 RETIREMENT BENEFITS continued
The overall expected return on assets assumption is derived as the weighted average of the expected returns from each of the main
asset classes. The expected return for each asset class reflects a combination of historical performance analysis, the forward looking
views of financial markets (as suggested by the yields available) and the views of investment organisations. Consideration is also
given to the rate of return expected to be available for reinvestment.
As at 1 April 2006 the UK scheme indirectly held 394,672 (last year 746,868) ordinary shares in Marks and Spencer Group plc
through its investment in an Aquila Life UK Equity Index Fund.
E Analysis of amount charged against profits
2006 2005
£m £m
Operating cost
Current service cost1109.9 113.8
Curtailment gain (13.0) (14.0)
96.9 99.8
Finance cost
Expected return on plan assets (265.5) (248.3)
Interest on scheme liabilities 248.0 236.9
Net finance income (17.5) (11.4)
Discontinued operations
Service cost and finance income of discontinued operation 1.3 3.4
Curtailment gain on disposal of Financial Services –(7.0)
Total cost of retirement benefits 80.7 84.8
1Includes defined contributions of £6.3m (last year £6.5m).
F Scheme assets
Changes in the fair value of the scheme assets are as follows:
2006 2005
£m £m
Fair value of scheme assets at start of year 3,956.8 3,634.2
Expected return on scheme assets1,2 265.9 248.9
Employer contributions3,4 130.2 156.4
Benefits paid (164.2) (160.1)
Transfer on disposal of Financial Services (32.0) –
Actuarial gain 454.3 77.4
Exchange 1.4 –
Discontinued operation (6.2) –
Fair value of scheme assets at end of year 4,606.2 3,956.8
1The expected return on scheme assets includes £0.4m (last year £0.6m) in respect of discontinued operations.
2The actual return on scheme assets was £720.2m (last year £325.7m).
3The cash contribution for 2005/06 includes an additional contribution of £51m paid into the UK defined benefit pension scheme in April 2005 (last year an additional
contribution of £64m was paid in March 2005).
4Future contributions to the UK scheme will be made at the rate of 15.8% of pensionable salaries up to the next full actuarial valuation. The Group expects to contribute
£60m to defined benefit schemes for the year ended 31 March 2007.