Barclays 2012 Annual Report Download - page 298

37 Pensions and post-retirement benefits
Accounting for pensions and post-retirement benefits
The Group operates a number of pension schemes including defined contribution and defined benefit as well as post-employment benefit
schemes.
Defined contribution schemes – the Group recognises contributions due in respect of the accounting period in the income statement.
Any contributions unpaid at the balance sheet date are included as a liability.
Defined benefit schemes – the Group recognises its obligation to members of the scheme at the period end, less the fair value of the scheme
assets and unrecognised actuarial gains or losses. Each scheme’s obligations are calculated using the projected unit credit method on the
assumptions set out in the note below. Scheme assets are stated at fair value as at the period end.
The Group uses the option within IAS 19 Employee Benefits to defer actuarial gains and losses over the remaining service lives of the
employees.
Actuarial gains and losses comprise experience adjustments (differences between previous actuarial assumptions and what has actually
occurred) and the effects of changes in actuarial assumptions. Cumulative actuarial gains and losses, to the extent that they exceed the
greater of: 10% of the fair value of the scheme assets or 10% of the present value of the defined benefit obligation, are deferred and the excess
amortised in the income statement over the average service lives of scheme members. Gains and losses on curtailments are recognised when
the curtailment occurs, which may be when a demonstrable commitment to a reduction in benefits, or reduction in eligible employees, occurs.
The gain or loss comprises any change in the present value of the obligation, the fair value of the assets and any related unrecognised actuarial
gain or loss and past service costs.
Where a scheme’s assets and its unrecognised actuarial losses exceed its obligation, an asset is recognised to the extent that it does not
exceed the present value of future contribution holidays or refunds of contributions.
Post-employment benefits – the cost of providing health care benefits to retired employees is accrued as a liability in the financial statements
over the period that the employees provide services to the Group, using a methodology similar to that for defined benefit pension schemes.
Future accounting development
From 1 January 2013, the Group will adopt IAS 19 revised. Had the Group adopted the revisions in these financial statements the net
recognised position would reduce by £3.3bn (2011: £1.7bn) resulting in a liability of £1.3bn (2011: £0.2bn). Profit after tax for the period
ended 31 December 2012 would have been lower by £22m (2011: £83m) and other comprehensive income lower by £2.4bn (2011: £1.2bn).
Shareholders equity would have been reduced by £2.5bn (2011: £1.3bn) and additional deferred tax assets of £0.8bn (2011: £0.5bn) would
have been recognised.
Pension schemes
From 1 October 2012 a new UK pension scheme, the Barclays Pension Savings Plan (BPSP) was established to satisfy Auto Enrolment legislation.
The BPSP is a defined contribution scheme providing benefits for all new UK employees, and all existing Investment Bank employees, along with
all UK employees who were not members of a pension scheme as at 1 October 2012.
The UK Retirement Fund (UKRF) is the Group’s main defined benefit scheme, representing approximately 93% of the Group’s total retirement
benefit obligations. The UKRF was closed to new entrants as at 1 October 2012, and comprises ten sections, the most significant of which are:
 Afterwork: comprising of a voluntary defined contribution element and a contributory cash balance defined benefit. The cash balance element
is revalued until Normal Retirement Age in line with the increase in Retail Price Index (RPI) (maximum 5%). An investment-related increase of
up to 2% a year may also be added at Barclays discretion. Between 1 October 2003 and 1 October 2012 the majority of new UK employees
outside of the Investment Bank were eligible to join this section;
 The Pension Investment Plan (PIP): a defined contribution section providing benefits for Investment Bank employees from 1 July 2001 to
1 October 2012. This section was closed as at 1 October 2012 for existing and new Investment Bank employees. All PIP members now
accrue benefits in the BPSP mentioned above; and
 The 1964 Pension Scheme: most employees recruited before July 1997 built up benefits in this non-contributory defined benefit scheme in
respect of service up to 31 March 2010. Pensions were calculated by reference to service and pensionable salary. From 1 April 2010 members
became eligible to accrue future service benefits in either Afterwork or PIP.
The costs of ill-health retirements and death in service benefits are borne by the UKRF for Afterwork members, and through insured policies
for BPSP members.
barclays.com/annualreport296 I Barclays PLC Annual Report 2012
Notes to the financial statements
For the year ended 31 December 2012 continued