Barclays 2014 Annual Report Download - page 327

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35 Pensions and post retirement benefits continued
The UKRF’s post-retirement mortality assumptions are based on a best estimate assumption derived from an analysis in 2014 of Barclays own
post-retirement mortality experience, and taking account of the recent evidence from published mortality surveys. An allowance has been made
for future mortality improvements based on the 2013 core projection model published by the Continuous Mortality Investigation Bureau subject to
a long term trend of 1.25% p.a. in future improvements. The table below shows how the assumed life expectancy at 60, for members of the UKRF,
has varied over the last three years:
Assumed life expectancy
2014 2013 2012
Life expectancy at 60 for current pensioners (years)
– Males 28.3 27.9 27.8
– Females 29.9 29.0 28.9
Life expectancy at 60 for future pensioners currently aged 40 (years)
– Males 30.1 29.3 29.2
– Females 31.9 30.6 30.5
Sensitivity analysis on actuarial assumptions
The sensitivity analysis has been calculated by valuing the UKRF liabilities using the amended assumptions shown in the table below and keeping
the remaining assumptions the same as disclosed in the UKRF assumptions table above, except in the case of the inflation sensitivity where other
assumptions that depend on assumed inflation have also been amended correspondingly. The difference between the recalculated liability figure
and that stated in the balance sheet reconciliation table above is the figure shown. The selection of these movements to illustrate the sensitivity
of the defined benefit obligation to key assumptions should not be interpreted as Barclays expressing any specific view of the probability of such
movements happening.
Change in key assumptions
2014 2013
Impact on UKRF defined
benefit obligation
Impact on UKRF defined
benefit obligation
(Decrease)/
Increase
%
(Decrease)/
Increase
£bn
(Decrease)/
Increase
%
(Decrease)/
Increase
£bn
0.5% increase in discount rate (9.0) (2.5) (9.2) (2.3)
0.5% increase in assumed price inflation 7.3 2.0 7.8 2.0
1 year increase to life expectancy at 60 3.5 1.0 3.0 0.8
The weighted average duration of the benefit payments reflected in the defined benefit obligation for the UKRF is 19 years.
Assets
A long-term investment strategy has been set for the UKRF, with its asset allocation comprising a mixture of equities, bonds, property and other
appropriate assets. This recognises that different asset classes are likely to produce different long-term returns and some asset classes may be
more volatile than others. The long-term investment strategy ensures, amongst other aims, that investments are adequately diversified. Asset
managers are permitted some flexibility to vary the asset allocation from the long-term investment strategy within control ranges agreed with the
Trustee from time to time.
The UKRF also employs derivative instruments, where appropriate, to achieve a desired exposure or return, or to match assets more closely to
liabilities. The value of assets shown reflects the actual physical assets held by the scheme, with any derivative holdings reflected on a mark to
market basis.
The value of the assets of the schemes and their percentage in relation to total scheme assets were as follows:
Analysis of scheme assets
Total Of which relates to UKRF
As at 31 December 2014 Value
£m
% of total
fair value of
scheme
assets
%
Value
£m
% of total
fair value of
scheme
assets
%
Equities – quoted 6,813 23.6 5,808 21.6
Equities – non-quoted 1,549 5.4 1,537 5.7
Bonds – fixed governmenta934 3.2 609 2.3
Bonds – index-linked governmenta7,114 24.6 7,114 26.5
Bonds – corporate and othera5,599 19.4 5,317 19.8
Property – commercialb2,023 7.0 1,945 7.3
Derivativesb1,472 5.1 1,472 5.5
Cash 2,897 10.0 2,644 9.9
Pooled fundsc284 1.0 284 1.1
Otherb189 0.7 97 0.3
Fair value of scheme assets 28,874 100.0 26,827 100.0
Notes
a Assets held are predominantly quoted.
b Assets held are predominantly non-quoted.
c Pooled funds relate to a variety of investments which are predominantly non-quoted.
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