Marks and Spencer 2003 Annual Report Download - page 40

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38 Marks and Spencer Gro up p.l.c.
Notes to the financial statements
11. Pension costs continued
B FRS 17 disclosure
Financial Reporting Standard 17 (FRS 17) ‘Retirement benefits’ was issued in November 2000 to replace SSAP 24 ‘Accounting
for pension costs’ and will be fully mandatory for the Group for the year ending 31 March 2006. This year the Group has
continued to account for pension costs under SSAP 24 as shown on page 37, although in accordance with the FRS 17
transitional arrangements, certain additional disclosures are required as shown below.
(a) The major assumptions used by the independent qualified actuaries in updating the most recent valuations of the UK
and Republic of Ireland defined benefit pension schemes to 29 March 2003 for FRS 17 purposes were:
2003 2002
%%
Rate of increase in salaries 3.5 4.0
Rate of increase in pensions in payment 2.5 2.5
Discount rate 5.5 5.9
Inflation rate 2.5 2.5
Long-term healthcare cost increases 7.5 7.5
(b) On full compliance with FRS 17, on the basis of the above assumptions, the amounts that would have been charged to
the consolidated profit and loss account and consolidated statement of total recognised gains and losses for the year ended
29 March 2003 are set out below:
2003
£m
Operating profit
Current service costs 124
Finance income
Expected return on scheme assets 231
Interest on scheme liabilities (204)
Net credit to finance income 27
Total charge 97
Consolidated statement of total recognised gains and (losses)
Actual return less expected return on scheme assets (713)
Experience gains and losses arising on scheme liabilities 16
Changes in assumptions underlying the present value of scheme liabilities (196)
Actuarial loss recognisable in consolidated statement of total recognised gains and losses (893)
(c) The assets in the UK and Republic of Ireland defined benefit pension schemes and the expected long-term rates of
return as at 29 March 2003 were: Expected long-term rate of return p.a. Value
2003 2002 2003 2002
%%£m £m
UK equities 8.7 7.9 766 1,156
Overseas equities 9.0 8.3 785 992
Government bonds 4.6 5.3 499 301
Corporate bonds (Triple B or above) 5.5 5.9 560 770
Other 4.0 4.6 145 9
Total market value of assets 7.3 7.3 2,755 3,228
Present value of scheme liabilities (3,883) (3,498)
Pension scheme deficit before adjustment for prepayment (1,128) (270)
Prepaid pension costs included in assets noted above (120) (119)
Pension scheme deficit (1,248) (389)
Unfunded pension plans (4) (5)
Post-retirement healthcare (24) (25)
Total post-retirement liabilities (1,276) (419)
Less: Related deferred tax asset 383 126
Net post-retirement liability (893) (293)