Barclays 2014 Annual Report Download - page 328

326 I Barclays PLC Annual Report 2014 barclays.com/annualreport
Notes to the financial statements
Employee benefits
35 Pensions and post retirement benefits continued
Analysis of scheme assets
Total Of which relates to UKRF
As at 31 December 2013 Value
£m
% of total
fair value of
scheme
assets
%
Value
£m
% of total
fair value of
scheme
assets
%
Equities – quoted 3,420 13.3 2,355 10.0
Equities – non quoted 1,299 5.0 1,270 5.4
Bonds – fixed governmenta1,342 5.2 888 3.8
Bonds – index-linked governmenta6,356 24.8 6,365 26.8
Bonds – corporate and othera3,715 14.5 3,533 14.9
Property – commercialb1,376 5.3 1,320 5.6
Derivativesb1,425 5.5 1,425 6.0
Cash 4,202 16.3 3,903 16.5
Pooled fundsc2,342 9.1 2,342 9.9
Otherb266 1.0 260 1.1
Fair value of scheme assets 25,743 100.0 23,661 100.0
Included within the fair value of scheme assets were: £3m (2013: £5m) relating to shares in Barclays PLC, £39m (2013: £31m) relating to bonds
issued by the Barclays Group, £6m (2013: £7m) relating to property occupied by Group companies, and £14m (2013: £10m) relating to other
investments including deposits with Barclays banks. The UKRF also invests in investment vehicles which may hold shares or debt issued by the
Barclays Group.
The UKRF scheme assets also includes £36.2m (2013: £35.9m) relating to UK private equity investments and £1,502m (2013: £1,255m) relating to
overseas private equity investments. These are disclosed above within equities – non quoted.
Approximately a third of the UKRF assets are invested in liability driven investment strategies; primarily UK gilts as well as interest rate and inflation
swaps. These are used to better match the assets to its liabilities. The swaps are used to reduce the scheme’s inflation and duration risks against
its liabilities.
Funding
The latest triennial funding valuation of the UKRF was carried out with an effective date of 30 September 2013. This was completed in 2014 and
showed a deficit of £3.6bn and a funding level of 87.4%. The Bank and Trustee agreed a scheme-specific funding target, statement of funding
principles, a schedule of contributions and a recovery plan to eliminate the deficit in the Fund. The main differences between the funding and
IAS 19 assumptions are a more prudent longevity assumption for funding and a different approach to setting the discount rate.
The recovery plan to eliminate the deficit will result in the Bank paying deficit contributions to the Fund until 2021. Deficit contributions of £300m
are payable in 2015, and also in 2016. Further deficit contributions of £740m p.a. are payable during 2017 to 2021. Up to £500m of the 2021 deficit
contributions are payable in 2017 depending on the deficit level at that time. These deficit contributions are in addition to the regular contributions
to meet the Group’s share of the cost of benefits accruing over each year.
In non-valuation years the Scheme Actuary prepares an annual update of the funding position. The latest annual update was carried out as at
30 September 2014 and showed a deficit of £4.6bn and a funding level of 85.4%. The increase in funding deficit over the year to 30 September
2014 can be mainly attributed to the fall in real gilt yields over the year.
Defined benefit contributions paid with respect to the UKRF were as follows:
Contributions paid
£m
2014 241
2013 238
2012 742
The Group’s expected contribution to the UKRF in respect of defined benefits in 2015 is £622m (2014: £218m). In addition the expected
contributions to UK defined contribution schemes in 2015 is £41m (2014: £46m) to the UKRF and £107m (2014: £103m) to the BPSP. For the
material non-UK defined benefit schemes the expected contributions in 2015 are £56m (2014: £107m).
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.