Barclays 2004 Annual Report Download - page 143

4 Pension costs (continued)
Pension charge for 2004
It is the Bank’s policy to allow for the results of a new valuation in its pension charge in the year following the valuation date. Therefore, the 2004
figures shown below reflect the 2003 interim actuarial valuation.
The approach taken to calculating the pension charge in the accounts for the UKRF was to take assets and liabilities at market values with effect
from 1st January 2004. The principal financial assumptions used to derive the pensions charge for 2004 for the material sections of the UKRF
were as follows:
Price inflation 2.75% Return on future investments:
Pension increases 2.75% 1964 Scheme 7.0%
afterwork 6.75%
Earnings growth 4.25% Discounted rate for assessing accrued liabilities:
afterwork Credit Account revaluation rate 3.75% 1964 Scheme 6.6%
afterwork 6.75%
This resulted in an accounting surplus of assets over the accrued liabilities and pension repayments of £419m, allowing for expected future salary
increases. Spreading the accounting surplus using the straight-line method over the future remaining service lives of the active members
produced a variation from regular cost of £107m including interest.
Without the benefit of the surplus, based on the 2003 interim valuation, the 1964 Pension Scheme charge would be 20.7% of the pensionable
salaries (on the projected unit method), the afterwork section charge would be 9.7% of pensionable salaries and the Career Average section
charge would be 8.9% of pensionable salaries assessed using the assumption regarding return on new investments. Contributions to the PIP
would equal the contributions described above plus the costs of ill-health and death in service benefits.
The pensions charge in the accounts was reduced over the remaining service lives of the members to take account of the surplus, arising from the
interim actuarial valuation.
2004 2003 2002
£m £m £m
Pension costs vary from regular costs as follows (UKRF):
Regular costs 219 221 197
Variation from regular costs (including interest) (107) (90) (266)
112 131 (69)
Of the total regular cost in 2004 of £219m, £149m relates to the 1964 Pension Scheme, £46m to afterwork and £24m to the PIP. The regular cost
of Career Average in the UKRF was less than £1m.
Total pension costs of the Group are summarised as follows:
2004 2003 2002
£m £m £m
The UK Retirement Fund 112 131 (69)
Other UK pension schemes 617 20
Overseas pension schemes 42 32 22
160 180 (27)
The Bank also operates a defined benefit scheme for overseas employees of the Bank similar in design to the 1964 Pension Scheme, the Barclays Bank
(1951) Pension Fund, which had a formal valuation as at 30th September 2002 and an interim valuation as at 31st January 2004. The pension charge
has been assessed using consistent assumptions to those used for the 1964 Pension Scheme and a credit of £9m (2003: £3m, 2002: £3m) is included
in Other UK pension schemes.
A net prepayment of £881m was reflected in the balance sheet (2003: £637m), which results from the difference between the amounts
recognised as costs in the profit and loss account and the amounts funded.
Note 49 contains the disclosures required by FRS 17. Note 52 provides additional disclosures required by US Statement of Financial Accounting
Standards (SFAS) No. 132 (revised).
Barclays PLC Annual Report 2004
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