Ryanair 2006 Annual Report Download - page 60

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20 FINANCE EXPENSE
2006 2005
000 000
Interest payable on bank loans wholly repayable after five years 73,758 57,499
Interest arising on pension liabilities 200 130
73,958 57,629
21 PENSIONS
The group accounts for pensions in accordance with IAS 19, “Employee Benefits,” (IAS 19).
The company operates defined benefit and defined contribution schemes.
(i) Defined benefit schemes.
The group funds the pension entitlements of certain employees through defined benefit plans. Two plans are operated for eligible
Irish and UK employees. In general, on retirement, a member is entitled to pension calculated at 1/60th of final pensionable salary
for each year of pensionable service, subject to a maximum of 40 years. These plans are fully funded on a discontinuance basis and
the related pension costs and liabilities are assessed in accordance with the advice of a professionally qualified actuary. The
investments of the plans at March 31, 2006 consisted of units held in independently administered funds. The most recent full
actuarial valuations of the plans were carried out at December 31, 2003 in accordance with local regulatory requirements in Ireland
using the projected unit credit method and the valuation reports are not available for public inspection.
The actuarial report showed that at the valuation date the market value of the scheme’s assets was 11.5m, which was sufficient to
cover more than 100% of the accrued liabilities, based on current earnings and 78% of the accrued liabilities allowing for expected
future increases in earnings. The actuarial report recommends payment of contributions at 11.5% of staff and 17.8% of pilots’
pensionable salaries respectively, which is an increase from previous contribution rates, intended to make good the shortfall on
accrued liabilities allowing for expected future increases in earnings.
A separate annual actuarial valuation has been performed for the purposes of preparing these financial statements. The principal
actuarial assumptions used for the purpose of this actuarial valuation were as follows:
2006 2005
%%
Discount rate used for Irish plan 4.75 4.50
Discount rate used for UK plan 4.90 5.35
Return on plan assets for Irish plan 6.61 6.43
Return on plan assets for UK plan 6.93 6.61
Rate of Euro inflation 2.25 2.00
Rate of UK inflation 2.75 2.75
Future pension increases 2.75 2.75
Future salary increases for Irish plan 3.25 3.50
Future salary increases for UK plan 3.75 4.25
The key mortality assumptions used at March 31, 2006 are:
Irish scheme
Pre-retirement: 100% PMA92 (c=2025) for males, 100% PFA92 (c=2025) for females
Post-retirement: 100% PMA92 (c=2025) for males, 100% PFA92 (c=2025) for females
UK scheme
Pre-retirement: none
Post-retirement: 100% PMA92 (c=2025) for males, 100% PFA92 (c=2025) for females
(Continued)
Notes
60
ANNUAL REPORT & FINANCIAL STATEMENTS 2006