HSBC 2012 Annual Report Download - page 417

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Overview Operating & Financial Review Corporate Governance Financial Statements Shareholder Information
Defined benefit pension plans
Net asset/(liability) under defined benefit pension plans
HSBC Bank (UK) Pension Scheme Other plans
2012 2011 2012 2011
US$m US$m US$m US$m
Fair value of plan assets
At 1 January .................................................................................. 26,604 22,236 8,232 7,559
Expected return on plan assets ..................................................... 1,245 1,325 486 481
Contributions by HSBC ................................................................ 238 600 475 565
– normal .................................................................................... 238 314 191 176
– special .................................................................................... –286 284 389
Contributions by employees ......................................................... 37 34 20 22
Experience gains ........................................................................... 680 3,426 410 200
Benefits paid ................................................................................. (907) (803) (630) (495)
Assets distributed on settlements ................................................. – – (16) (25)
Exchange differences .................................................................... 1,195 (214) 38 (75)
At 31 December ............................................................................ 29,092 26,604 9,015 8,232
Present value of defined benefit obligations
At 1 January .................................................................................. (24,367) (22,858) (10,680) (9,785)
Current service cost ...................................................................... (236) (251) (310) (299)
Interest cost ................................................................................... (1,178) (1,233) (404) (456)
Contributions by employees ......................................................... (36) (34) (21) (22)
Actuarial losses ............................................................................. (472) (1,481) (850) (842)
Benefits paid ................................................................................. 906 804 743 569
Past service cost – vested immediately ........................................ – 587 (47) (40)
Past service cost – unvested benefits ............................................ – – 2 2
Reduction in liabilities resulting from curtailments ..................... – – 11 59
Liabilities extinguished on settlements ........................................ – – 26 29
Exchange differences .................................................................... (1,092) 99 (70) 105
At 31 December ............................................................................ (26,475) (24,367) (11,600) (10,680)
Funded ...................................................................................... (26,475) (24,367) (10,956) (10,074)
Unfunded .................................................................................. ––(644) (606)
Effect of limit on plan surpluses ................................................... – – (19) (18)
Unrecognised past service cost ..................................................... – – 19 21
Net asset/(liability) ....................................................................... 2,617 2,237 (2,585) (2,445)
Retirement benefit liabilities recognised in the balance sheet ..... – – (2,814) (2,705)
Retirement benefit assets recognised in the balance sheet
(within ‘Other assets’) .............................................................. 2,617 2,237 229 260
Plan assets of the Group’s pension schemes included US$20m (2011: US$45m) of equities and no bonds (2011: nil)
issued by HSBC and US$292m (2011: US$1,228m) of other assets placed or transacted with HSBC. The fair value of
plan assets included derivatives entered into with HSBC Bank plc by the HSBC Bank (UK) Pension Scheme with a
positive fair value of US$5,226m at 31 December 2012 (2011: US$5,560m positive fair value) and US$328m
positive fair value (2011: US$297m positive fair value) in respect of the HSBC International Staff Retirement
Benefits Scheme. Further details of these swap arrangements are included in Note 44.
In December 2011, HSBC Bank plc made a £184m (US$286m) special contribution to the HSBC Bank (UK) Pension
Scheme. Following the contribution the Scheme purchased asset-backed securities from HSBC at an arm’s length
value, determined by the Scheme’s independent third-party advisers.
The special contributions of US$284m to other plans include an additional contribution of US$181m to the HSBC
North America (US) Retirement Income Plan which was made to maintain a minimum funding level.
The actual return on plan assets for the year ended 31 December 2012 was a positive return of US$2,784m (2011:
positive US$5,432m).
HSBC expects to make US$604m of contributions to defined benefit pension plans during 2013. Benefits expected to
be paid from the plans to retirees over each of the next five years, and in aggregate for the five years thereafter, are as
follows: