Barclays 2015 Annual Report Download - page 328

326 I Barclays PLC Annual Report 2015 home.barclays/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
Value
£m
% of total
fair value of
scheme
assets
%
Value
£m
% of total
fair value of
scheme
assets
%
As at 31 December 2014
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
Included within the fair value of scheme assets were: £5m (2014: £3m) relating to shares in Barclays PLC, £23m (2014: £39m) relating to bonds
issued by the Barclays Group, £6m (2014: £6m) relating to property occupied by Group companies, and £7m (2014: £14m) relating to other
investments. The UKRF also invests in investment vehicles which may hold shares or debt issued by the Barclays Group.
The UKRF scheme assets also include £36m (2014: £36m) relating to UK private equity investments and £1,714m (2014: £1,502m) 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 next funding valuation of the UKRF is due to be completed in 2017 with an effective
date of 30 September 2016. 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 2015 and showed a deficit of £6.0bn and a funding level of 82.7%. The increase in funding deficit over the year
to 30 September can be mainly attributed to the fall in real gilt yields over the year.
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
were paid in 2015, and also are payable in 2016. Further deficit contributions of £740m per annum are payable during 2017 to 2021. Up to £500m of
the 2021 deficit contribution is 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 2015 and showed a deficit of £6.0bn and a funding level of 82.7%. The increase in funding deficit over the year to 30 September 2015
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
2015 586
2014 241
2013 238
The Group’s expected contribution to the UKRF in respect of defined benefits in 2016 is £632m (2015: £586m). In addition, the expected
contributions to UK defined contribution schemes in 2016 is £49m (2015: £52m) to the UKRF and £140m (2015: £126m) to the BPSP. For the
material non-UK defined benefit schemes, the expected contributions in 2016 are £78m (2015: £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.