Barclays 2003 Annual Report Download - page 176

Notes to the Accounts
For the Year Ended 31st December 2003
174
60 Retirement benefits
As disclosed in Note 4, Barclays accounts for pensions in accordance with SSAP 24. The disclosure in Note 4 sets out details of the assumptions
underlying the SSAP 24 valuation.
FRS 17 ‘Retirement Benefits’ will be effective for companies subject to UK accounting standards for years beginning on or after 1st January 2005.
In 2003, the standard requires disclosures to be made of the amount of the asset or liability that would have been recognised in the balance sheet
and the amounts that would have been recognised in the performance statements if the standard had been implemented.
As described in Note 4, Barclays provides pension plans for employees in most parts of the world. For the purposes of the standard, the UK
Retirement Fund (UKRF) and other defined benefit pension schemes in the UK, US, Germany and Spain, are considered to be material. The scheme
in Germany and one of the US schemes are unfunded. The disclosures below reflect interim actuarial valuations as at 31st December 2003 by a
professionally qualified independent actuary using the projected unit method. This method results in the current service cost in respect of closed
schemes (primarily 1964 Pension Scheme) increasing as the members of the scheme approach retirement.
The protected rights contributions in respect of RIS and PIP were £10m for RIS and PIP members in 2003 with expected contributions for
PIP only of £4m next year. Other UKRF payments include a £500m contribution in December 2003 as described in Note 4. Other UK schemes paid
contributions of £14m in the year (2002: £27m) and are expected to pay contributions of £5m next year. Overseas schemes paid contributions of
£3m in the year (2002: £1m) and are expected to pay contributions of £3m next year.
The main financial assumptions used in the actuarial valuations were:
2003 2002 2001
UK Overseas UK Overseas UK Overseas
schemes schemes schemes schemes schemes schemes
% p.a. % p.a % p.a. % p.a. % p.a. % p.a.
Inflation 2.75 2-2.7 2.3 2-2.5 2.5 2.0-3.5
Rate of increase in salaries 4.3 3.5-4.5 3.8 3.5-4.5 4 3.5-4.5
Rate of increase for pensions in payment and deferred pensions 2.75-3.25 0-2.0 2.3-3.25 0-2.0 2.5-3.25 1.75-2.0
Rate used to discount scheme liabilities 5.5 5.25-6.25 5.7 5.5-6.75 5.75 5.3-7.25
The value of the assets and liabilities of the schemes, the assumed long-term real rates of return and the assets and liabilities at 31st December 2003
and 31st December 2002 were as follows:
2003 2002 2001
UK schemes Overseas schemes UK schemes Overseas schemes UK schemes Overseas schemes
Real Real Real Real Real Real
rate of rate of rate of rate of rate of rate of
return Value return Value return Value return Value return Value return Value
%£m %£m %£m %£m %£m %£m
United Kingdom equities 5.25 2,504 – – 6.0 2,492 6.0 6 5.25 4,984 5.25 16
US equities 5.25 1,369 5.25 90 6.0 795 6.0 78 5.25 969 5.25 135
Other equities 5.25 2,268 5.25 29 6.3 2,077 6.3 15 5.50 2,650 5.50 11
United Kingdom corporate bonds 2.5 1,391 – – 3.2-3.3 927 – – 3.20 595 – –
United Kingdom fixed interest gilts 2.0 287 – – 2.1 448 – – 2.50 96 – –
United Kingdom index-linked gilts 2.0 2,188 – – 2.1 1,779 – – 2.50 1,136 – –
Property 3.91,157––4.7 1,159 – – 4.25 1,177 – –
US debt fund – – 1.8 28 – – 1.9 42 – – 2.00 56
US Treasury stock 1.439––1.5 61 0.7 34 2.50 41 – –
Other overseas bonds
and government stock 2.5-3.3 592 2.3-3.3 78 3.3-4.1 475 – – 3.2-3.6 340 – –
Cash 1.5 430 1.0-1.5 14 2 231 – – 2.00 187 – –
Other (a) –325–––205–––194––
Asset transfer following
the creation of FirstCaribbean – (103) – – –(121)––––––
Fair value of scheme assets 12,447 239 10,528 175 12,369 218
Present value of scheme liabilities (b) (14,037) (273) (12,017) (214) (11,955) (226)
Net (deficit)/surplus in the schemes (1,590) (34) (1,489) (39) 414 (8)
Net deficit in UK schemes at 31st December 2003 includes a deficit of £1,586m (2002: deficit of £1,311m) relating to the UKRF.
Notes
(a) Other includes £316m (2002: £194m) representing the money purchase assets of the UKRF.
(b) Present value of scheme liabilities includes £316m (2002: £194m) representing money purchase liabilities of the UKRF.