Virgin Media 2007 Annual Report Download - page 126

VIRGIN MEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. Employee Benefit Plans (Continued)
The weighted-average assumptions used to determine net periodic benefit costs were as follows:
December 31,
2007 2006
Discount rate ..................................................... 5.00% 4.75%
Expected long term rate of return on plan assets ........................... 6.57% 6.28%
Rate of compensation increase ........................................ 3.25% 3.25%
Where investments are held in bonds and cash, the expected long term rate of return is taken to
be yields generally prevailing on such assets at the measurement date. A higher rate of return is
expected on equity investments, which is based on future expectations of returns. The overall expected
long term rate of return on plan assets is then the average of these rates taking into account the
underlying asset portfolios of the pension plans.
Plan Assets
Our pension plan weighted-average asset allocations at December 31, 2007 and 2006 by asset
category were as follows:
December 31,
2007 2006
Asset Category
Equity Securities ................................................. 50.8% 51.2%
Debt Securities .................................................. 43.5% 43.5%
Real Estate ..................................................... 2.1% 2.3%
Other ......................................................... 3.6% 3.0%
Total .......................................................... 100.0% 100.0%
The trustees of the main defined benefit pension plan, which makes up 83% of the assets of our
two defined benefit pension plans, have in place an agreement with the investment managers that
targets an allocation of 50% equities and property and 50% bonds and cash at December 31, 2007.
Relatively small deviations from these central targets are permitted from time to time due to market
movements and the discretion of the fund manager based on his tactical views. As all our defined
benefit pension plans are now closed to new entrants, the investment strategy will move towards a
higher proportion of bonds over time to reflect the steadily maturing profile of liabilities and the
improvement in the funding position.
There were no directly owned shares of our common stock included in the equity securities at
December 31, 2007 or 2006.
Cash Flows
We expect to contribute a total of £13.5 million to our defined benefit pension plans during 2008.
F-40