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Financial statements Marks and Spencer Group plc Annual report and financial statements 2012 89
Overview Strategic review Financial review Governance Financial statements and other information
11 Retirement benefits continued
D. Analysis of assets and expected rates of return
The major categories of assets as a percentage of total plan assets are:
2012
£m
2011
£m
2012
%
2011
%
Scottish Limited Partnership interest (see note 12) 664.8 656.0 11 12
UK equities 232.6 303.3 46
Overseas equities 777.4 839.4 13 16
Government bonds 1,750.9 1,446.9 28 27
Corporate bonds 1,455.7 1,531.4 23 28
Swaps¹ 275.9 (48.2) 4(1)
Cash and other 1,029.1 669.3 17 12
Total market value of assets 6,186.4 5,398.1 100 100
1 The swaps hedge interest and inflation rate exposures within the schemes’ liabilities.
The expected long-term rates of return are:
2012
%
2011
%
Scottish Limited Partnership interest (see note 12) 3.5 4.6
UK equities 7.8 8.4
Overseas equities 7.8 8.4
Government bonds 3.3 4.3
Corporate bonds 4.9 5.8
Swaps 3.3 4.1
Cash and other 3.3 4.1
Overall expected return 4.9 5.8
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 107,216 (last year 122,362) ordinary shares in the Company through its investment
in an Aquila Life UK Equity Index Fund.
E. Analysis of amount charged against profits
2012
£m
2011
£m
Operating cost
Current service cost 56.7 59.0
Curtailment charge 1.0 1.0
One-off pension credit (see note 5) –(10.7)
57.7 49.3
Finance cost
Expected return on plan assets (307.4) (323.1)
Interest on scheme liabilities 281.8 285.5
Net finance income (25.6) (37.6)
Total 32.1 11.7
F. Scheme assets
Changes in the fair value of the scheme assets are as follows:
2012
£m
2011
£m
Fair value of scheme assets at start of year 5,398.1 4,948.6
Expected return on scheme assets¹ 307.4 323.1
Employer contributions 131.9 259.8
Contributions from scheme members –0.2
Benefits paid (230.4) (256.3)
Actuarial gain 581.0 124.1
Exchange movement (1.6) (1.4)
Fair value of scheme assets at end of year 6,186.4 5,398.1
1 The actual return on scheme assets was £888.4m (last year return of £447.2m).