Vodafone 2015 Annual Report Download - page 161

Dened benet schemes
At the start of the year, the Group had two main UK dened benet schemes being the Vodafone UK Group Pension Scheme (‘Vodafone UK plan’)
and the Cable & Wireless Worldwide Retirement Plan (‘CWWRP’). The Vodafone UK plan and the CWWRP plan closed to future accrual on 31 March
2010 and 30 November 2013 respectively. Until 30 November 2013 the CWWRP allowed employees to accrue a pension at a rate of 1/85th of their
nal salary for each year of service until the retirement age of 60 with a maximum pension of two thirds of nal salary. Employees contributed 5%
of their salary into the scheme.
On 6 June 2014, the assets and liabilities of the CWWRP were transferred into a new section of the Vodafone UK plan. The CWWRP was then wound
up. There are now two segregated sections of the Vodafone UK plan, the pre-existing assets and liabilities in the Vodafone Section and the former
CWWRP assets and liabilities in the CWW Section.
The dened benet plans are administered by Trustee Boards that are legally separated from the Group. The Trustee Board of each pension fund
consists of representatives who are employees, former employees or are independent from the Company. The Boards of the pension funds are
required by law to act in the best interest of the plan participants and are responsible for setting certain policies, such as investment and contribution
policies, and the governance of the fund.
The dened benet pension schemes expose the Group to actuarial risks such as longer than expected longevity of members, lower than expected
return on investments and higher than expected ination, which may increase the liabilities or reduce the value of assets of the plans.
The UK pensions environment is regulated by the Pensions Regulator whose statutory objectives are set out in legislation and include promoting
and improving understanding of the good administration of work-based pensions, protecting member benets and regulating occupational
dened benet and contribution schemes. The Pensions Regulator is a non-departmental public body established under the Pensions Act 2004
and sponsored by the Department for Work And Pensions, operating within a legal regulatory framework set by the UK Parliament. The Pensions
Regulator’s statutory objectives and regulatory powers are described on its website at thepensionsregulator.gov.uk.
The Vodafone UK plan is registered as an occupational pension plan with HMRC and is subject to UK legislation and oversight from the Pensions
Regulator. UK legislation requires that pension schemes are funded prudently and that valuations are undertaken at least every three years.
Separate valuations are required for the Vodafone Section and CWW Section. Within 15 months of each valuation date, the plan trustees and the
Group must agree any contributions required to ensure that the plan is fully funded over time on a suitably prudent measure.
The most recent valuations for the Vodafone and CWWRP sections of the Vodafone UK plan were carried out as at 31 March 2013 by independent
actuaries appointed by the plan Trustees. These valuations revealed a total decit of £437 million on the schemes’ funding basis. Following the
valuation, the Group paid special one-off contributions totalling £365 million in April 2014 (£325 million into the Vodafone Section and £40 million
into the CWW Section). These lump sum contributions represented accelerated funding amounts that would otherwise have been due over the
period to 31 March 2020. No further contributions are therefore currently due for the Vodafone UK plan for the period to 31 March 2016. The next
valuation date is 31 March 2016, at which point the position of the scheme will be assessed again.
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 ordinary contributions relating to future service of £39 million will be paid into the Group’s dened
benet pension schemes during the year ending 31 March 2016.
The Group has also provided certain guarantees in respect of the Vodafone UK plan; further details are provided in note 30 “Contingent liabilities”
to the consolidated nancial statements.
Actuarial assumptions
The Group’s scheme liabilities are measured using the projected unit credit method using the principal actuarial assumptions set out below:
2015 2014 2013
%% %
Weighted average actuarial assumptions used at 31 March1:
Rate of ination23.0 3.2 3.3
Rate of increase in salaries 2.8 3.1 3.8
Discount rate 3.0 4.2 4.3
Notes:
1 Figures shown represent a weighted average assumption of the individual schemes.
2 The rate of increase in pensions in payment and deferred payment is the rate of ination.
Mortality assumptions used are based on recommendations from the individual scheme actuaries which include adjustments for the experience
of the Group where appropriate. The Group’s largest scheme is the Vodafone UK plan. Further life expectancies assumed for the UK schemes
are24.5/25.8 years (2014: 23.3/24.7 years; 2013: 23.6/25.3 years) for a male/female pensioner currently aged 65 and 27.1/28.7 years
(2014: 25.9/27.5 years; 2013: 26.8/27.9 years) from age 65 for a male/female non-pensioner member currently aged 40.
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Annual Report 2015
159