Aviva 2009 Annual Report Download - page 234

232
Aviva plc Notes to the consolidated financial statements continued
Annual Report and Accounts 2009
47 – Pension obligations continued
The mortality tables, average life expectancy and pension duration used at 31 December 2009 for scheme members are as follows:
Life expectancy/(pension
duration) at NRA of a male
Life expectancy/(pension
duration) at NRA of a female
Mortality table
Normal
retirement
age (NRA)
Currently
aged NRA
20 years
younger
than NRA
Currently
aged NRA
20 years
younger
than NRA
UK
PA92U2010MC with a one year age rating deduction and
including an allowance for future improvements 60
89.4
(29.4)
92.5
(32.5)
91.8
(31.8)
93.9
(33.9)
Netherlands CRC8b, which includes allowance for future improvements up to 2050 65
82.5
(17.5)
84.0
(19.0)
86.1
(21.1)
86.8
(21.8)
Canada UP1994 projected to 2015, using Scale AA 65
84.4
(19.4)
84.4
(19.4)
86.8
(21.8)
86.8
(21.8)
Ireland 94% PNA00 with allowance for future improvements 61
86.5
(25.5)
89.5
(28.5)
89.3
(28.3)
92.3
(31.3)
The assumptions above are based on commonly-used mortality tables. In the UK, the standard mortality tables have been adjusted
to reflect recent research into mortality experience. However, the extent of future improvements in longevity is subject to
considerable uncertainty and judgement is required in setting this assumption. In the UK schemes, which are by far the most
material to the Group, the assumptions include an allowance for future mortality improvement, based on the actuarial profession’s
medium cohort projection table and incorporating underpins to the rate of future improvement equal to 1.5% p.a. for males and
1.0% p.a. for females. The effect of assuming all members were one year younger would increase the above schemes’ liabilities by
£248 million and the service cost for the year by £5 million.
The discounted scheme liabilities have an average duration of 22 years in the UK schemes and between 12 and 18 years in the
overseas schemes. The undiscounted benefits payable from the main UK defined benefit scheme are expected to be as shown in
the chart below:
Undiscounted benefit payments £m
1,200
1,000
800
600
400
200
0
2010 2020 2030 2040 2050 2060 2070 2080 2090 2100
(ii) Assumptions on scheme assets
The expected rates of return on the schemes’ assets are:
UK Netherlands Canada Ireland
2010 2009 2010 2009 2010 2009 2010 2009
Equities 7.8% 6.3% 6.8% 6.0% 7.6% 4.5% 7.2% 6.0%
Bonds 4.8% 5.2% 4.3% 3.8% 3.5% 4.3% 4.5% 4.1%
Property 6.3% 4.8% 5.2% 5.7% n/a n/a 5.7% 4.5%
Cash 0.9% 3.2% n/a 3.8% n/a n/a 2.9% 3.0%
The overall rates of return are based on the expected returns within each asset category and on current asset allocations.
The expected returns for equities and properties have been aligned with the rates used for the longer-term investment return
assumptions, other than in the Netherlands, where they have been developed in conjunction with external advisers due to the
characteristics of the scheme. The figures for the total expected return on scheme assets in the following section are stated
after deducting investment expenses.