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Financial statements Marks and Spencer Group plc Annual report and financial statements 2013 93
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:
2013
£m
2012
£m
2013
%
2012
%
Scottish Limited Partnership interest (see note 12) 645.7 664.8 911
UK equities 224.0 232.6 34
Overseas equities 736.3 777.4 11 13
Government bonds 3,188.3 1,750.9 46 28
Corporate bonds 1,388.5 1,455.7 20 23
Swaps¹ 276.1 275.9 44
Cash and other 471.1 1,029.1 717
Total market value of assets 6,930.0 6,186.4 100 100
1. The swaps hedge interest and inflation rate exposures within the schemes’ liabilities.
The expected long-term rates of return are:
2013
%
2012
%
Scottish Limited Partnership interest (see note 12) 2.3 3.5
UK equities 7.8 7.8
Overseas equities 7.8 7.8
Government bonds 3.2 3.3
Corporate bonds 4.3 4.9
Swaps 3.0 3.3
Cash and other 3.0 3.3
Overall expected return 4.4 4.9
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 150,955 (last year 107,216) ordinary shares in the Company through its investment in UK
Equity Index Funds.
E. Analysis of amount charged against profits
2013
£m
2012
£m
Operating cost
Current service cost 68.8 56.7
Curtailment charge 1.0 1.0
Past service cost (1.4) –
68.4 57.7
Finance cost
Expected return on scheme assets (298.0) (307.4)
Interest on scheme liabilities 276.8 281.8
Net finance income (21.2) (25.6)
Total 47.2 32.1
F. Scheme assets
Changes in the fair value of the scheme assets are as follows:
2013
£m
2012
£m
Fair value of scheme assets at start of year 6,186.4 5,398.1
Expected return on scheme assets¹ 298.0 307.4
Employer contributions 70.9 131.9
Benefits paid (235.0) (230.4)
Actuarial gain 607.3 581.0
Exchange movement 2.4 (1.6)
Fair value of scheme assets at end of year 6,930.0 6,186.4
1. The actual return on scheme assets was £905.3m (last year return of £888.4m).
Future contributions to the UK scheme will be made at the rate of 23.4% of pensionable salaries up to the next full actuarial
valuation. The Group expects to contribute c.£28m to the UK defined benefit scheme for the year ended 29 March 2014.