Tesco 2004 Annual Report Download - page 51

TESCO PLC 49
NOTE 27 Pensions
The Group has continued to account for pensions and other post-employment beneÞts in accordance with SSAP 24 and the
disclosures in note (a) below are those required by that standard. FRS 17, Retirement BeneÞts was issued in November 2000,
and the transitional disclosures required by that standard, to the extent they are not given in note (a), are set out in note (b).
For the year ending February 2006 the Group is expected to adopt International Accounting Standard 19.
The full actuarial valuation of the main UK scheme carried out as at 31 March 2002 continues to form the basis for funding the
scheme. The company has reviewed the results of the subsequent FRS 17 valuation and does not consider that any changes to
the level of funding are necessary at this time.
(a) Pension commitments
United Kingdom
The principal plan within the Group is the Tesco PLC Pension Scheme, which is a funded deÞned beneÞt pension scheme in the
UK, the assets of which are held as a segregated fund and administered by trustees. The total proÞt and loss charge of UK
schemes to the Group during the year was £152m (2003  £114m). A SSAP 24 pension prepayment of £12m (2003  £6m)
is present in the Group balance sheet.
An independent actuary, using the projected unit method, carried out the latest actuarial assessment of the scheme at 31 March
2002. The assumptions that have the most signiÞcant effect on the results of the valuation are those relating to the rate of return
on investments and the rate of increase in salaries and pensions.
The key assumptions made were a rate of return on investments of 6.75%, a rate of increase in salaries of 4% and a rate of
increase in pensions of 2.5%.
At the date of the last actuarial valuation, the market value of the schemes assets was £1,576m and the actuarial value of these
assets represented 91% of the beneÞts that had accrued to members, after allowing for expected future increases in earnings
and pensions in payment. The actuarial shortfall of £159m will be met via increased contributions over a period of ten years,
being the expected average remaining service lifetime of employed members. The next actuarial valuation is due at 31 March 2005.
The T&S Stores PLC Senior Executive Pension Scheme is a funded deÞned beneÞt scheme open to senior executives and certain
other employees at the invitation of the company. An independent actuary, using the projected unit method, carried out the latest
actuarial assessment of the scheme at 6 April 2001. At that time, the market value of the schemes assets was £5.8m and the
actuarial value of these assets represented 110% of the beneÞts that had accrued to members, after allowing for expected future
increases in earnings.
Overseas
The Group operates a number of schemes worldwide, which include deÞned beneÞt and deÞned contribution schemes. The
contributions payable for non-UK schemes of £8m (2003  £8m) have been fully expensed against proÞts in the current year. A
funded deÞned beneÞt scheme operates in the Republic of Ireland. An independent actuary, using the projected unit method,
carried out the latest actuarial assessment of the scheme at 1 April 2001. At that time the market value of the schemes assets
was £55m and the actuarial value of these assets represented 123% of the beneÞts that had accrued to members, after allowing
for expected future increases in earnings.
(b) FRS 17, Retirement BeneÞts
The valuations used for FRS 17 have been based on the most recent actuarial valuations and updated by Watson Wyatt LLP to
take account of the requirements of FRS 17 in order to assess the liabilities of the schemes at 28 February 2004. Schemes assets
are stated at their market values at 28 February 2004. Buck Consultants (Ireland) Limited have updated the most recent Republic
of Ireland valuation. The liabilities relating to post-retirement healthcare beneÞts (note 28) have also been determined in accordance
with FRS 17, and are incorporated in the following tables.