Barclays 2013 Annual Report Download - page 354

Note 37: Pensions and post retirement benefits continued
Pension schemes
UK Retirement Fund (UKRF)
The UKRF is the Group’s main scheme, representing 91% of the Group’s total retirement benefit obligations. The UKRF was closed to new entrants
on 1 October 2012, and comprises ten sections, the most significant of which are:
 Afterwork, which comprises a contributory cash balance defined benefit element, and a voluntary defined contribution element. The cash
balance element is accrued each year and revalued until Normal Retirement Age in line with the increase in Retail Price Index (RPI) (up to a
maximum of 5% pa). 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 employees outside of Investment Bank were eligible to join this section. The costs of ill-health retirements
and death in service benefits for Afterwork members are borne by the UKRF. The main risks that Barclays runs in relation to Afterwork are more
limited than in traditional final salary pension plans, being the risk of needing to make additional contributions if pre-retirement investment
returns are not sufficient to provide for the benefits. The discretionary element of the benefit provides a partial buffer against this risk.
 The Pension Investment Plan (PIP): a defined contribution section providing benefits for Investment Bank employees from 1 July 2001 to
1 October 2012.
 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 risks that Barclays runs in relation to the 1964 pension section
are typical of final salary pension plans. Principally that investment returns fall short of expectations, that inflation exceeds expectations, and
that retirees live longer than expected.
Barclays Pension Savings Plan (BPSP)
 From 1 October 2012 a new UK pension scheme, the BPSP was established to satisfy Auto Enrolment legislation. The BPSP is a defined
contribution scheme (Group Personal Pension) providing benefits for all new Barclays UK hires from 1 October 2012, Investment Bank UK
employees who were in PIP as at 1 October 2012, and also all UK employees who were not members of a pension scheme as at that date. As a
defined contribution plan, BPSP is not subject to the same investment return, inflation or longevity risks that defined benefit plans face.
Members’ benefits reflect contributions paid and the level of investment returns achieved.
Apart from the UKRF and the BPSP, Barclays operates a number of smaller pension and long-term employee benefits and post-retirement
healthcare plans globally, the largest of which are the US and South African defined benefit schemes. Many of the plans are funded, with assets
backing the obligations held in separate legal vehicles such as trusts. Others are operated on an unfunded basis. The benefits provided the
approach to funding and the legal basis of the plans reflect their local environments.
Governance
The UKRF operates under trust law and is managed and administered on behalf of the members in accordance with the terms of the Trust Deed
and Rules and all relevant legislation. The Corporate Trustee is Barclays Pension Funds Trustees Limited, a private limited company and a wholly
owned subsidiary of Barclays Bank PLC. The Trustee is the legal owner of the assets of the UKRF which are held separately from the assets of the
Group.
The Trustee Board comprises six Management Directors selected by Barclays, of whom three are independent Directors with no relationship with
Barclays or the UKRF, plus three Member Nominated Directors selected from eligible active staff and pensioner members who apply for the role.
The BPSP is a Group Personal Pension arrangement which operates as a collection of personal pension plans. Each personal pension plan is a
direct contract between the employee and the BPSP provider (Legal & General Assurance Society Limited), and is regulated by the FCA.
Similar principles of pension governance apply to the Group’s other pension schemes, although different legislation covers overseas schemes
where, in most cases, the Group has the power to determine the funding rate.
Amounts recognised
The following tables include: amounts recognised in the income statement and an analysis of benefit obligations and scheme assets for all Group
schemes. The net position is reconciled to the assets and liabilities recognised on the balance sheet. The tables include funded and unfunded
post-retirement benefits.
Income statement charge
2013
£m
2012
£m
2011
£m
Current service costa371 410 414
Net finance cost/(income) 55 (10) 143
Past service costb4 (33) 23
Settlements (3) (12) –
Total 427 355 580
Notes
a Current service cost for the year ended 31 December 2012 and 31 December 2011 has been restated to bring the DC costs for active members of the South Africa pension plan
within defined benefit accounting.
b The past service cost relates to additional benefits provided in Spain during restructuring, offset by savings from restructuring programs in France and Portugal and scheme
closure in Ireland.
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352 Barclays PLC Annual Report 2013
Notes to the financial statements
For the year ended 31 December 2013 continued