Barclays 2006 Annual Report Download - page 269

Barclays PLC
Annual Report 2006 265
Financial statements
3
60 Differences between IFRS and US GAAP accounting principles (continued)
(c) Pensions and post-retirement benefits (continued)
The weighted-average assumptions used to determine net periodic benefit cost for pensions are as follows:
2006 2005
Barclays Barclays Barclays Barclays
Capital Capital Capital Capital
Retirement Restoration Retirement Restoration
Plan Plan UKRF Plan Plan UKRF
%%%%%%
Discount rate 5.50 5.50 5.08 5.75 5.75 5.60
Rate of compensation increase 4.50 4.50 4.30 4.50 4.50 4.30
Expected long-term return on plan assets 8.00 n/a 6.45 8.50 n/a 6.70
The weighted-average assumptions used to determine benefit obligations for pensions are as follows:
2006 2005
Barclays Barclays Barclays Barclays
Capital Capital Capital Capital
Retirement Restoration Retirement Restoration
Plan Plan UKRF Plan Plan UKRF
%%%%%%
Discount rate 6.00 6.00 5.01 5.50 5.50 5.08
Rate of compensation increase 4.50 4.50 4.00 4.50 4.50 4.30
Inflation 2.80 2.80 3.00 2.70 2.70 2.75
A number of additional changes have been made to the assumptions used in valuing the liabilities of the UKRF, including a decrease in the assumed
rate of real salary increases to 1% (30th September 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 30th September 2005.
For measurement purposes, the calculations assume a 10% 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 2006 year (11% and 5% at the end of 2005). The rate for 2007 is assumed
to be 10% and to decrease to 5% over five years to 2012 and remain at that level thereafter. For pensioners in the UK the calculation assumes a
9% increase in the per capita cost of covered medical benefits is adopted for the 2006 year end (10% annual rate as at the end of 2005). The rate for
2007 is assumed to be 8% and to decrease to 5% by 2010 and remain at that level thereafter.
Details of the post-retirement health care expense under IFRS are given in Note 35 to the accounts.
The accounting for the post-retirement benefits charge assumed a discount rate of 5.5% (2005: 5.75%) for US benefits and 5.1% (2005: 5.6%)
for UK benefits on a weighted average basis.
(d) Share-based payments
The total equity settled share-based payment cost recognised for US GAAP for 2006 is £640m (2005: £338m, 2004: £204m).
The related tax benefit was £193m (2005: £80m, 2004: £nil).
The tax benefit from share options exercised during the year was £161m (2005: £56m).
(e) Deferred tax
In accordance with SFAS No. 109 ‘Accounting for Income Taxes’, the components of US GAAP deferred tax assets and liabilities are as follows:
2006 2005
£m £m
Deferred tax liabilities:
Deferred tax liabilities under IFRS (see Note 21) 282 700
In respect of IFRS/US GAAP reconciling items 175 116
Total deferred tax liabilities 457 816
Deferred tax assets:
Deferred tax assets under IFRS (see Note 21) 764 686
Add: valuation allowance 294 252
In respect of IFRS/US GAAP reconciling items (137) (441)
Total deferred tax assets before valuation allowance 921 497
Less: valuation allowance (294) (252)
Deferred tax assets less valuation allowance 627 245