Vodafone 2014 Annual Report Download - page 158

26. Post employment benets (continued)
Funding plans are individually agreed for each of the Group’s dened benet pension schemes with the respective trustees, taking into account
local regulatory requirements. It is expected that contributions of £400 million will be paid into the Group’s dened benet pension schemes during
the year ending 31 March 2015, including a special one-off contribution of £325 million payable into the Vodafone UK plan and £40 million into
the CWWRP in April 2014. These one-off contributions represent accelerated funding amounts that would have been due for each scheme over
the period to 31 March 2020. The Group has also provided certain guarantees in respect of the UK schemes; further details are provided in note 30,
“Contingent liabilities”.
Duration of the benet obligations
The weighted average duration of the dened benet obligation at 31 March 2014 is 21.7 years (2013: 21.4 years, 2012: 23.6 years).
Fair value of pension assets
2014 2013
£m £m
Cash and cash equivalents 65 117
Equity investments:
With quoted prices in an active market 1,318 1,310
Without quoted prices in an active market 102 129
Debt instruments:
With quoted prices in an active market 1,320 1,129
Without quoted prices in an active market – –
Property 20 36
Derivatives1 541 485
Annuity policies 476 517
Total 3,842 3,723
Note:
1 Derivatives include collateral held in the form of cash.
The schemes have no direct investments in the Group’s equity securities or in property currently used by the Group.
Each of the plans manage risks through a variety of methods and strategies including equity protection, to limit downside risk in falls in equity
markets, ination and interest rate hedging and, in the CWWRP, a substantial insured pensioner buy-in policy.
The actual return on plan assets over the year to 31 March 2014 was £48 million (2013: £335 million).
Sensitivity analysis
Measurement of the Group’s dened benet retirement obligation is sensitive to changes in certain key assumptions. The sensitivity analysis below
shows how a reasonably possible increase or decrease in a particular assumption would, in isolation, result in an increase or decrease in the present
value of the dened benet obligation as at 31 March 2014.
Rate of ination Rate of increase in salaries Discount rate Life expectancy
Decrease by 0.5%
£m
Increase by 0.5%
£m
Decrease by 0.5%
£m
Increase by 0.5%
£m
Decrease by 0.5%
£m
Increase by 0.5%
£m
Increase by 1 year
£m
Decrease by 1 year
£m
(Decrease)/increase in present value
of dened obligation (349) 382 (18) 20 512 (439) 103 (103)
The sensitivity analysis may not be representative of an actual change in the dened benet obligation as it is unlikely that changes in assumptions
would occur in isolation of one another.
In presenting this sensitivity analysis, the present value of the dened benet obligation has been calculated on the same basis as prior years using
the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the dened benet obligation
liability recognised in the statement of nancial position.
Notes to the consolidated nancial statements (continued)
Vodafone Group Plc
Annual Report 2014156