Barclays 2007 Annual Report Download - page 211

3
Financial statements
Barclays PLC Annual Report 2007 209
30 Retirement benefit obligations (continued)
Assumptions
Obligations arising under defined benefit schemes are actuarially valued using the projected unit credit method. Under this method, where a defined
benefit scheme is closed to new members, such as in the case of the 1964 Pension Scheme, the current service cost expressed as a percentage of salary
is expected to increase in the future, although this higher rate will be applied to a decreasing payroll. The latest actuarial IAS valuations were carried out as
at 31st December using the following assumptions:
UK schemes Overseas schemes
2007 2006 2007 2006
% p.a. % p.a. % p.a. % p.a.
Discount rate 5.82 5.12 7.51 6.94
Rate of increase in salaries 3.95 4.08 5.60 5.66
Inflation rate 3.45 3.08 4.13 3.94
Rate of increase for pensions in payment 3.45 2.88 3.55 3.58
Rate of increase for pensions in deferment 3.30 3.08 2.50 2.24
Initial health care inflation 8.00 8.93 10.00 9.93
Long-term health care inflation 5.00 5.00 5.01 5.00
Expected return on plan assets 6.70 6.32 7.84 7.89
The expected return on plan assets assumption is weighted on the basis of the fair value of these assets. Health care inflation assumptions are weighted
on the basis of the health care cost for the period. All other assumptions are weighted on the basis of the defined benefit obligation at the end of the
period.
The UK Schemes discount rate assumption is based on the yield on the iBoxx (over 15 year) AA corporate bond index.
The overseas health care inflation assumptions relate to the US and Mauritius.
Mortality assumptions
The post-retirement mortality assumptions used in valuing the liabilities of the UKRF were based on the standard 2000 series tables as published by
the Institute and Faculty of Actuaries. These tables are considered to be most relevant to the population of the UKRF based on their mortality history.
These were then adjusted in line with the actual experience of the UKRF’s own pensioners relative to the standard table. An allowance has been made for
future mortality improvements based on the medium cohort projections published by the CMIB. On this basis the post-retirement mortality assumptions
for the UKRF includes:
2007 2006 2005 2004 2003
Longevity at 60 for current pensioners (years)
– Males 26.7 25.8 25.8 25.7 23.3
– Females 27.9 29.5 29.5 29.4 26.4
Longevity at 60 for future pensioners currently aged 40 (years)
– Males 28.0 27.1 27.1 27.0 24.9
– Females 29.1 30.7 30.6 30.6 27.9