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Financial statements Marks and Spencer Group plc Annual report and financial statements 2013 92
Notes to the financial statements continued
11 Retirement benefits continued
A. Pensions and other post-retirement liabilities
2013
£m
2012
£m
Total market value of assets 6,930.0 6,186.4
Present value of scheme liabilities (6,723.9) (6,095.1)
Net funded pension plan asset 206.1 91.3
Unfunded retirement benefits (0.8) (0.8)
Post-retirement healthcare (12.3) (12.5)
Net retirement benefit asset 193.0 78.0
Analysed in the statement of financial position as:
Retirement benefit asset 206.1 91.3
Retirement benefit deficit (13.1) (13.3)
193.0 78.0
B. Financial assumptions
A full actuarial valuation of the UK Defined Benefit Pension Scheme was carried out at 31 March 2012 and showed a deficit of
£290m. A funding plan of £112m was agreed with the Trustees. The difference between the valuation and the funding plan is
expected to be met by investment returns on the existing assets of the pension scheme. The financial assumptions for the UK
scheme and the most recent actuarial valuations of the other post-retirement schemes have been updated by independent qualified
actuaries to take account of the requirements of IAS 19 – ‘Employee Benefits’ in order to assess the liabilities of the schemes and
are as follows:
2013
%
2012
%
Rate of increase in salaries 1.0 1.0
Rate of increase in pensions in payment for service 2.4 – 3.2 2.3 – 3.1
Discount rate 4.3 4.6
Inflation rate 3.4 3.1
Long-term healthcare cost increases 7.1 7.1
The inflation rate of 3.4% reflects the Retail Price Index (RPI) rate. Certain benefits have been calculated with reference to the
Consumer Price Index (CPI) as the inflationary measure and in these instances a rate of 2.4% (last year 2.1%) has been used.
The amount of the surplus varies if the main financial assumptions change, particularly the discount rate. If the discount rate
increased/decreased by 0.1% the IAS 19 surplus would increase/decrease by c.£115m (last year £110m). If the inflation rate
increased by 0.1%, the IAS 19 surplus would decrease by c.£50m and if the inflation rate decreased by 0.1%, the IAS 19 surplus
would increase by c.£75m.
C. Demographic assumptions
Apart from post retirement mortality, the demographic assumptions are in line with those adopted for the last formal actuarial
valuation of the scheme performed as at 31 March 2012. The post-retirement mortality assumptions are based on an analysis of the
pensioner mortality trends under the scheme for the period to March 2012 updated to allow for anticipated longevity improvements
over the subsequent years. The specific mortality rates used are based on the VITA tables, adjusted to allow for the experience of
scheme pensioners. The life expectancies underlying the valuation are as follows:
2013 2012
Current pensioners (at age 65) – males 22.4 22.1
– females 24.1 23.4
Future pensioners (at age 65) – males 21.8 23.2
– females 24.5 24.3
An increase of one year in the life expectancies would decrease the IAS 19 surplus by c.£230m.