Virgin Media 2008 Annual Report Download - page 197

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 11—Employee Benefit Plans (Continued)
The components of net periodic benefit costs were as follows (in millions):
Year ended December 31,
2008 2007 2006
Service cost ................................... £ 1.4 £ 2.4 £ 2.5
Interest cost .................................. 18.3 16.7 15.7
Expected return on plan assets ..................... (21.5) (19.0) (16.7)
Recognized actuarial loss ......................... — — 1.1
Plan settlements ............................... — 0.2 1.0
Total net periodic benefit cost ..................... £ (1.8) £ 0.3 £ 3.6
As a result of the sale of our Broadcast operations on January 31, 2005, we have retained the
earned pension and other post-retirement benefits liabilities related to certain employees of the
Broadcast operations. Accordingly, the information disclosed in the tables above includes amounts
relating to liabilities of these employees.
Assumptions
The weighted-average assumptions used to determine benefit obligations were as follows:
December 31,
2008 2007
Discount rate ........................................ 5.75% 5.75%
Rate of compensation increase ........................... 3.00% 3.50%
The weighted-average assumptions used to determine net periodic benefit costs were as follows:
December 31,
2008 2007
Discount rate ........................................ 5.75% 5.00%
Expected long term rate of return on plan assets .............. 6.68% 6.57%
Rate of compensation increase ........................... 3.50% 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 more on realistic future expectations than on the
returns that have been available historically. 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.
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