Barclays 2005 Annual Report Download - page 272

Barclays PLC
Annual Report 2005
270
Notes to the accounts
For the year ended 31st December 2005
63 Differences between IFRS and US GAAP accounting principles (continued)
(c) Pensions and post-retirement benefits
Upon transition to IFRS, all schemes held by the Group have been reassessed and, consequently, the following schemes are deemed material for
US GAAP purposes; the UK Retirement Fund (UKRF), Barclays Capital Retirement Plan and Barclays Capital Restoration Plan (Barclays Capital
schemes). Together these schemes make up approximately 95% of all the Group’s schemes in terms of assets and actuarial liabilities. In 2004, the
pension scheme assessed under US GAAP was the UKRF which is composed of the 1964 Pension Scheme, Retirement Investment Scheme, Pension
Investment Plan, afterwork and the Career Average Section.
The provisions of US GAAP have been applied to the UKRF based on a measurement date of 30th September, and to the remaining schemes based
on a measurement date of 31st December. Consequently, the £250m contribution made to the UKRF in December 2004 is included in the US GAAP
analysis of the assets and the £350m contribution made to the UKRF in December 2005 is excluded from the US GAAP analysis of plan assets.
Under the terms of an agreement between the Bank, the Trustees of the Woolwich Pension Fund (WPF) and the Trustees of the UKRF, the final
transfer of the liabilities of the WPF into the UKRF was made on 1st May 2004, following which the remaining £56.2m assets in the WPF were
transferred to the UKRF and a special contribution of £2m was paid into the UKRF.
The components of the pension and post-retirements expense (where an actuarial basis is appropriate) which arise under US GAAP are as follows:
2005 2004
Post- Post-
retirement retirement
Pensions benefits Pensions benefits
£m £m £m £m
Components of net periodic benefit cost
Service cost 361 2 319 1
Interest cost 808 6 692 5
Expected return on plan assets (818) – (738) –
Amortisation of transition adjustment –1––
Termination benefits 51 – ––
Recognised net actuarial loss 40 2 27 2
Net periodic benefit cost 442 11 300 8
For measurement purposes, the calculation assumes an 11% and 5% annual rate of increase in the per capita cost of covered medical benefits and
dental benefits respectively for pensioners in the US at the end of the 2005 year (10.6% and 5% at the end of 2004). The rate for 2006 is assumed
to be 10% and to decrease to 5% over five years to 2011 and remain at that level thereafter.
For pensioners in the UK the calculation assumes a 10% increase in the per capita cost of covered medical benefits is adopted for the 2005 year end
(10.6% annual rate as at the end of 2004). The rate for 2006 is assumed to be 10% and to decrease to 5% over five years to 2011 and remain at
that level thereafter.
A one percentage point change in assumed health care trend rates would have the following effects for 2005:
1% increase 1% decrease
£m £m
Effect on total of service and interest cost components 1 (1)
Effect on post-retirement benefit obligation 22 (19)