Barclays 2006 Annual Report Download - page 209

Barclays PLC
Annual Report 2006 205
Financial statements
3
35 Retirement benefit obligations (continued)
Change in plan assets
2006 2005
Post-retirement Post-retirement
Pensions benefits Total Pensions benefits Total
UK Overseas UK Overseas UK Overseas UK Overseas
£m £m £m £m £m £m £m £m £m £m
Fair value of plan assets at
beginning of the year 15,571 819 – – 16,390 13,261 436 – – 13,697
Expected return on plan assets 965 34 – – 999 867 31 – – 898
Employer contribution 357 26 2 4 389 358 11 1 3 373
Settlements (11) (2) – – (13) (7) – – – (7)
Contributions by plan participants 15 2 – – 17 13 2 – – 15
Actuarial gain 423 25 – – 448 1,599 2 – – 1,601
Benefits paid (536) (30) (2) (4) (572) (490) (24) (1) (3) (518)
Business combinations –––––– 335 – – 335
Exchange and other adjustments (23) (129) – – (152) (30) 26 – – (4)
Fair value of plan assets
at the end of the year 16,761 745 – – 17,506 15,571 819 – – 16,390
Amounts recognised on balance sheet
The pension and post-retirement benefit assets and liabilities recognised on the balance sheet are as follows:
2006 2005
Post-retirement Post-retirement
Pensions benefits Total Pensions benefits Total
UK Overseas UK Overseas UK Overseas UK Overseas
£m £m £m £m £m £m £m £m £m £m
Benefit obligation at
end of period (17,256) (894) (97) (76) (18,323) (18,149) (938) (103) (79) (19,269)
Fair value of plan assets at
end of period 16,761 745 – – 17,506 15,571 819 – – 16,390
Net deficit (495) (149) (97) (76) (817) (2,578) (119) (103) (79) (2,879)
Unrecognised actuarial (gains)/losses (953) 20 17 14 (902) 1,039 63 29 11 1,142
Net recognised liability (1,448) (129) (80) (62) (1,719) (1,539) (56) (74) (68) (1,737)
Recognised assets 53 35 – – 88 52 34 – – 86
Recognised liability (1,501) (164) (80) (62) (1,807) (1,591) (90) (74) (68) (1,823)
Net recognised liability (1,448) (129) (80) (62) (1,719) (1,539) (56) (74) (68) (1,737)
The UKRF deficit measured using the IAS 19 assumptions has decreased over the year from £2.5bn at 31st December 2005 to £0.5bn at
31st December 2006. Among the reasons for this change were greater than expected returns on assets and an increase in AA long-term corporate
bond yields which resulted in a higher discount rate of 5.12% (31st December 2005: 4.83%), partially offset by an increase in the inflation
assumption to 3.08% (31st December 2005: 2.75%). A number of additional changes were made to the assumptions used in valuing the liabilities,
including a decrease in the assumed rate of real salary increases to 1% (31st December 2005: 1.55%), a change in the assumption regarding pension
increases to recognise the caps and floors which apply to guaranteed pension increases, and the introduction of an explicit allowance for early
retirement and commutation. Mortality assumptions remain unchanged from those in force at 31st December 2005.
The Group operates a number of schemes that are insured with third-party insurers. Reimbursement rights of £60m in relation to these schemes
have been included within Other assets. The present value of the benefits payable under these schemes is £60m and has been included within the
net pension liability recognised on the balance sheet.
The IAS 19 pension surplus of the Absa Group Pension Fund as at 31st December 2006 was £60m (2005: £90m). A net IAS 19 liability of £nil
(2005: £nil) has been recognised on the balance sheet (consisting of £286m defined benefit obligation (2005: £335m) and £286m fair value of plan
assets (2005: £335m)). These balances are not recognised in the financial statements of the Absa Group Limited in accordance with South African
legislative requirements.