Vodafone 2003 Annual Report Download - page 118

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Vodafone Group Plc Annual Report & Accounts and Form 20-F 2003
116
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
The Japanese schemes are subject to valuations at intervals of between one and two years, with the last formal valuations being prepared at 31 March
2002. These have been undertaken by independent actuaries using the projected unit funding method of valuation.
At 31 March 2002, the total pension liability for the internally funded benefits was estimated at £110m. The total pension liability for the externally funded
benefits using the assumptions detailed in “Pension disclosures required under SSAP 24”below was £5m and the market value of the scheme’s assets for
the externally funded benefits amounted to £1m representing a percentage cover of accrued benefits for members of 20%.
An amount of £88m (2002: £92m) is included in provisions for liabilities and charges, representing the excess of the accumulated pension costs over the
amounts funded externally and reflects the internally funded nature of the principal arrangements.
Pension disclosures required under SSAP 24
During the year ended 31 March 2003, the total amount charged to the profit and loss account in respect of all the Group’s pensions plans was £95m
(2002: £64m, 2001: £47m), as analysed below:
Year ended 31 March
2003 2002 2001
£m £m £m
Defined benefit schemes:
United Kingdom 24 24 23
Germany 12 14 14
Japan 32 6 –
Other Countries 54 –
Net pension charge: Defined benefit schemes 73 48 37
Net pension charge: Defined contribution schemes 22 16 10
Total amount charged to the profit and loss account 95 64 47
Below is a summary of the principal assumptions used in both the most recent valuations and the pension cost analysed below:
UK Germany Japan(1)
%%%
Rate of inflation 2.5 2.0 –
Rate of increase in salaries 4.5 4.0 –
Rate of increase in pensions in payment 2.5 2.0 N/A
Rate of increase in deferred pensions 2.5 – N/A
Rate used to discount liabilities – pre-retirement 7.0 6.5 2.5
Rate used to discount liabilities – post-retirement 6.0 6.5 2.5
Note:
(1) Rate of increase in salaries in Japan is calculated in line with company specific experience where benefits are salary related
The components of the total pension costs of the three principal defined benefit schemes were as follows:
UK Germany Japan(2)
Year ended 31 March Year ended 31 March Year ended 31 March
2003 2002 2003 2002 2003 2002
£m £m £m £m £m £m
Regular cost 22 20 5612 5
Interest cost/(credit) (4) (2) 9821
Variation in regular cost(1) 66(2) –18 –
Total 24 24 12 14 32 6
Notes:
(1) The variation in regular cost was calculated by amortising the shortfall at 31 March 2002 over the future working lives of members on a percentage of
pensionable salary basis. The charge for Japan also includes £17m in respect of lump sum redundancy benefits payable through a redundancy
programme associated with the retirement plan.
(2) The numbers for 2002 represent the pension costs for the part of the year since the acquisition of the Japanese businesses.
34. Pensions continued