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89
Financial statements
11 Retirement benefits continued
D. Analysis of assets and expected rates of return
The major categories of assets as a percentage of total plan assets are:
2011
£m
2010
£m
2011
%
2010
%
Scottish Limited Partnership interest (see note 12) 656.0 631.7 12 13
UK equities 303.3 415.7 68
Overseas equities 839.4 1,283.4 16 26
Government bonds 1,791.9 53.9 33 1
Corporate bonds 1,531.4 2,520.8 28 51
Swaps¹ (48.2) (245.1) (1) (5)
Cash and other 324.3 288.2 66
5,398.1 4,948.6 100 100
1The swaps hedge interest and inflation rate exposures within the scheme ’ liabilities.
The expected long-term rates of return are:
2011
%
2010
%
Scottish Limited Partnership interest (see note 12) 4.6 5.1
UK equities 8.4 8.4
Overseas equities 8.4 8.4
Government bonds 4.3 4.5
Corporate bonds 5.8 5.5
Swaps 4.1 4.5
Cash and other 4.1 4.4
Overall expected return 5.8 6.5
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.
At year end, the UK scheme indirectly held 122,362 (last year 232,042) ordinary shares in the Company through its investment in an
Aquila Life UK Equity Index Fund.
E. Analysis of amount charged against profits
2011
£m
2010
£m
Operating cost
Current service cost 59.0 56.3
Curtailment charge 1.0 1.0
One-off pension credit (see note 5) (10.7) –
49.3 57.3
Finance cost
Expected return on plan assets (323.1) (281.4)
Interest on scheme liabilities 285.5 270.6
Net finance income (37.6) (10.8)
Total 11.7 46.5
F. Scheme assets
Changes in the fair value of the scheme assets are as follows:
2011
£m
2010
£m
Fair value of scheme assets at start of year 4,948.6 3,977.0
Expected return on scheme assets¹ 323.1 281.4
Employer contributions 259.8 82.7
Contributions from scheme members 0.2 –
Benefits paid (256.3) (257.0)
Actuarial gain 124.1 867.7
Exchange movement (1.4) (3.2)
Fair value of scheme assets at end of year 5,398.1 4,948.6
1The actual return on scheme assets was £447.2m (last year return of £1,149.1m).
s