Experian 2008 Annual Report Download - page 109

107Experian Annual Report 2008
Introduction 2 – 5
Business review 6 – 37
Governance 38 – 64
Financial statements Group financial statements Financial statements Group financial statements
27. Retirement benefit assets/obligations
The Group operates both defined benefit and defined contribution plans in a number of countries around the world and
provides post-retirement healthcare insurance benefits to certain former employees. A defined benefit plan is a pension
plan that defines an amount of pension benefit that an employee will receive on retirement, usually dependent on one or
more factors such as age, years of service and compensation. A defined contribution plan is a pension plan that defines the
amount of contributions that are paid by the Group into an independently administered fund.
Pension arrangements for the Group’s UK employees are operated principally through the Experian Pension Scheme which
is a defined benefit scheme and the Experian Money Purchase Pension Plan which is a defined contribution scheme. In
North and Latin America, benefits are determined in accordance with local practice and regulations and funding is provided
accordingly. There are no other material pension arrangements.
Following the demerger of Home Retail Group, the Argos Pension Scheme, 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 Pension Plan were
transferred to the Home Retail Group Stakeholder Pension Plan during the year.
(a) Defined benefit schemes
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 valuation was carried out as at 31 March 2007 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.
Whilst IFRIC 14 ‘IAS 19 – The Limit of a Defined Benefit Asset, Minimum Funding Requirements and their Interaction’ is not
effective for the current financial year, the Group has reviewed its provisions and is satisfied that these would have no effect
on the retirement benefit asset recognised in the Group balance sheet.
As reported last year, following changes introduced by the Finance Act 2004 which took effect from 6 April 2006 (A-Day), the Experian
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 actuarial gain recognised in the Group statement of recognised income and expense in that year by US$6m.
The disclosures required by IAS 19, which relate to the Group’s UK defined benefit pension arrangements only, are as follows:
Amounts recognised in the Group balance sheet
2008 2007
(Restated)
(Note 2)
Retirement benefit assets US$m US$m
Market value of funded schemes’ assets 1,045 1,069
Present value of funded schemes’ liabilities (863) (928)
Retirement benefit assets – surplus in the funded schemes 182 141
Retirement benefit obligations
Present value of unfunded pension arrangements 35 37
Liability for post-retirement healthcare 15 19
Retirement benefit obligations 50 56
As indicated in note 2, retirement benefit obligations are now separately reported in the Group balance sheet as this is a
more appropriate presentation of the nature of those obligations. The Group balance sheet at 31 March 2008 accordingly
includes a net retirement benefit asset of US$132m (2007: US$85m) made up of total plan assets of US$1,045m (2007: US$1,069m)
and total defined benefit obligations of US$913m (2007: US$984m).
As reported last year the Group has in place arrangements which secure unfunded pension benefit arrangements 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 is 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 Experian Pension Scheme. The total value of the assets charged in this way at 31 March 2008
was US$34m (2007: US$29m). Further details of the unfunded pension arrangements for directors appear in the report on
directors’ remuneration on page 62.