Marks and Spencer 2010 Annual Report Download - page 97

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Directors’ report p01
Financial statements
Other information p117
To find out more, visit www.marksandspencer.com/annualreport2010 93
11 Retirement benefits continued
The expected long-term rates of return are:
2010
%
2009
%
Property partnership interest 5.1 7.1
UK equities 8.4 8.0
Overseas equities 8.4 8.0
Government bonds 4.5 4.2
Corporate bonds 5.5 6.8
Swaps 4.5 4.2
Cash and other 4.4 4.2
Overall expected return 6.5 7.2
The overall expected return on assets assumption is derived as the weighted average of the expected returns from each of the main asset
classes. The expected return for each asset class reflects a combination of historical performance analysis, the forward-looking views of
financial markets (as suggested by the yields available) and the views of investment organisations. Consideration is also given to the rate
of return expected to be available for reinvestment.
At year end, the UK scheme indirectly held 232,042 (last year 369,793) ordinary shares in the Company through its investment in an Aquila
Life UK Equity Index Fund.
E. Analysis of amount charged against profits
2010
£m
2009
£m
Operating cost
Current service cost 56.3 72.2
Curtailment charge/(gain) 1.0 (5.0)
Exceptional pension credit (see note 5) –(231.3)
57.3 (164.1)
Finance cost
Expected return on plan assets (281.4) (334.6)
Interest on scheme liabilities 270.6 299.2
Net finance income (10.8) (35.4)
Total 46.5 (199.5)
F. Scheme assets
Changes in the fair value of the scheme assets are as follows:
2010
£m
2009
£m
Fair value of scheme assets at start of year 3,977.0 5,045.5
Expected return on scheme assets1 281.4 334.6
Employer contributions2 82.7 92.1
Contributions from scheme members –2.0
Benefits paid (257.0) (226.5)
Actuarial gain/(loss) 867.7 (1,280.3)
Exchange movement (3.2) 9.6
Fair value of scheme assets at end of year 4,948.6 3,977.0
1 The actual return on scheme assets was £1,149.1m (last year loss of £945.7m).
2 In 2007/08 the Group agreed to pre-fund £200.0m of its annual contribution to the UK efined enefit ension cheme for the next three years. The prepayment is in respect
of annual contributions to the UK scheme at the rate of 23.2% of pensionable salaries up to 30 September 2010 and then 22.9% up to the next financial year. It is estimated that
approximately £55.0m of the prepayment will relate to the year ended 2 April 2011.
D B P S