Barclays 2008 Annual Report Download - page 238

Notes to the accounts
For the year ended 31st December 2008
236 Barclays PLC Annual Report 2008 |Find out more at www.barclays.com/annualreport08
30Retirement benefit obligations (continued)
Change in plan assets
2008 2007
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 17,231 796 – – 18,027 16,761 745 ––17,506
Expected return on plan assets 1,134 41 – – 1,175 1,041 33 ––1,074
Employer contribution 336 71 2 9 418 355 34 2 15 406
Settlements –(2) – – (2) – (1) ––(1)
Contributions by plan participants 20 3 – – 23 19 2––21
Actuarial loss (4,534) (121) – – (4,655) (332) (11) ––(343)
Benefits paid (598) (42) (2) (9) (651) (589) (31) (2) (15) (637)
Business combinations ––––––––––
Exchange and other adjustments (52) 213 – – 161 (24) 25 ––1
Fair value of plan assets at
the end of the year 13,537 959 – – 14,496 17,231 796 ––18,027
Amounts recognised on balance sheet
The pension and post-retirement benefit assets and liabilities recognised on the balance sheet are as follows:
2008 2007
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 (14,395) (1,220) (43) (125) (15,783) (16,563) (913) (60) (98) (17,634)
Fair value of plan assets at
end of period 13,537 959 – – 14,496 17,231 796 ––18,027
Net (deficit)/asset (858) (261) (43) (125) (1,287) 668 (117) (60) (98) 393
Unrecognised actuarial (gains)/losses (167) 150 (11) 23 (5) (1,912) 7 (3) 14 (1,894)
Net recognised liability (1,025) (111) (54) (102) (1,292) (1,244) (110) (63) (84) (1,501)
Recognised assets – 65 – – 65 – 36 ––36
Recognised liability (1,025) (176) (54 ) (102) (1,357) (1,244) (146) (63) (84) (1,537)
Net recognised liability (1,025) (111) (54 ) (102) (1,292) (1,244) (110) (63) (84) (1,501)
The UKRF funded status, as measured using the IAS 19 assumptions, has decreased from a £0.7bn surplus at 31st December 2007 to a deficit of £0.9bn
at 31st December 2008.
The assumptions used for the current year and prior year are detailed below. Among the reasons for this change were the large loss on the assets over
the year and, to a lesser extent, a strengthening of the allowance made for future improvements in mortality. Offsetting these were the increase in AA
long-term corporate bond yields which resulted in a higher discount rate of 6.75% (31st December 2007: 5.82%), a decrease in the inflation assumption
to 3.16% (31st December 2007: 3.45%) and contributions paid.
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
2008 2007 2008 2007
% p.a. % p.a. % p.a. % p.a.
Discount rate 6.75 5.82 7.09 7.51
Rate of increase in salaries 3.66 3.95 5.93 5.60
Inflation rate 3.16 3.45 3.98 4.13
Rate of increase for pensions in payment 3.06 3.45 3.17 3.55
Rate of increase for pensions in deferment 3.16 3.30 4.37 2.50
Initial health care inflation 8.00 8.00 9.00 10.00
Long-term health care inflation 5.00 5.00 5.01 5.01
Expected return on plan assets 6.80 6.70 7.95 7.84