Experian 2007 Annual Report Download - page 96

Introduction | Business review | Governance | Financial statements
Notes to the Group financial statements
for the year ended 31 March 2007
94 |Experian Annual Report2007
24. Retirement benefit assets/obligations (continued)
(a) Defined Benefit Schemes (continued)
The Experian Pension Scheme has rules which specify the benefits to be paid and is financed accordingly with assets being held in independently
administered funds. A full actuarial funding valuation of this scheme is carried out every three years with interim reviews in the intervening years.
The latest full actuarial funding valuation of the scheme was carried out as at 31 March 2004 by independent, qualified actuaries, Watson Wyatt
Limited, using the projected unit credit method. Under this method of valuation the current service cost will increase as members approach
retirement due to the ageing active membership of the scheme.
Following the demerger of Home Retail Group, the Argos Pension Scheme, which is a defined benefit scheme for Home Retail Group employees,
continued to be operated by that business. On demerger the pension rights of certain Home Retail Group employees who had been members of
the then GUS Pension Scheme were transferred to the Argos Pension Scheme. Certain Home Retail Group employees who had been members of
the then GUS Money Purchase Plan will be transferred to the Home Retail Group Stakeholder Pension Plan in due course.
Following changes introduced by the Finance Act 2004 which took effect from 6 April 2006 (A-Day), the Experian Pension Scheme, being the
principal defined benefit pension scheme, implemented revised terms for members exchanging pension at retirement date for a tax-free lump sum.
The impact of the consequent update in assumptions reduced the charge to the Group income statement for the year ended 31 March 2007 by
US$2m and increased the actual gain recognised in the Group statement of recognised income and expense by US$6m.
Assets and liabilities of overseas schemes have been transferred through the purchase of annuities for all liabilities of the plans.
(i) The amounts recognised in the Group balance sheet are determined as follows:
UK Overseas Total
2007 2006 2007 2006 2007 2006
US$m US$m US$m US$m US$m US$m
Market value of schemes’ assets 1,069 1,952 –68 1,069 2,020
Present value of funded schemes’ liabilities (928) (1,852) –(68) (928) (1,920)
Surplus in the funded schemes 141 100 ––141 100
Present value of unfunded pension arrangements (37) (42) –(6) (37) (48)
Liability for post-retirement healthcare (19) (19) –(2) (19) (21)
Retirement benefit asset/(liability) recognised in the
Group balance sheet 85 39 –(8) 85 31
During the year ended 31 March 2006 the Group put in place arrangements to secure unfunded pension benefit arrangements already in place for
certain directors and senior managers by granting charges to an independent trustee over independently managed portfolios of marketable
securities owned by the Group. The amount of assets charged in this way will be adjusted annually to keep the ratio of assets charged to the
discounted value of the accrued benefits secured in this way as close as possible to the corresponding ratio in the Group’s registered pension
schemes. The total value of the assets charged in this way at 31 March 2007 was US$29m (2006: US$28m). Further details of the unfunded
pension arrangements for directors appear in the report on directors’ remuneration on page 57.
(ii) The amounts recognised in the Group profit and loss account reserve were as follows:
UK Overseas Total
2007 2006 2007 2006 2007 2006
US$m US$m US$m US$m US$m US$m
Current service cost 53 65 –553 70
Curtailment gain (6) –––(6) –
Interest on schemes’ liabilities 78 88 –378 91
Expected return on schemes’ assets (107) (100) –(3) (107) (103)
Total charge to Group income statement 18 53 –518 58
Actuarial (gain)/loss recognised in the Group statement
of recognised income and expense (65) (44) –31 (65) (13)
Other charge to profit and loss account reserve in respect
of the Argos Pension Scheme 41 –––41 –
Total (credit)/charge to Group profit and loss account reserve (6) 9–36 (6) 45
The charge to Group income statement includes US$17m (2006: US$41m) in respect of discontinued operations. The charge to profit and loss account
reserve in respect of the Argos Pension Scheme forms part of the dividend in specie on the demerger of Home Retail Group.
The curtailment gain arises from the restructuring of the UK Account Processing and the UK Marketing Solutions businesses, as well as the cessation of
certain corporate functions in GUS plc.