127
Annual Report and Accounts 2014
2014 Years
2013 Years
2012 Years
Life expectancy at age 65 (UK Funds only)
Current male pensioners
21.2
21.0
20.9
Current female pensioners
24.0
23.9
23.8
Future male pensioners
23.0
22.8
22.7
Future female pensioners
26.0
25.9
25.8
The mortality assumptions used for the UK Funds above reflect its experience, together with an allowance for improvements over time. The experience was
reviewed as part of the formal triennial actuarial valuation carried out as at 31 March 2014, and the assumptions used as at 31 December 2014 and 2013 reflect
the results of this review. The allowance for future improvements in mortality rates from 2014 is in line with the CMI’s (a research body funded by the actuarial
profession to collect and analyse UK mortality rates) 2013 Core Projection model, with a long-term improvement rate of 1.5% pa.
The table below left illustrates how the UK Funds’ net pension surplus would decrease (excluding the impact of inflation rate and interest rate hedging),
as at 31 December 2014, in the event of the following reasonable changes in the key assumptions above.
The table below right shows how the net pension deficit for IMI’s non-UK plans would increase, in the event of the following reasonable changes in the key
assumptions above.
4.5.3.3 Income statement
In accordance with IAS19, pension costs recorded through the income statement primarily represent the increase in the defined benefit obligation based on
employee service during the year and the interest on the net liability or surplus for defined benefit obligations in respect of employee service in previous years.
The table below shows the total cost reported in the income statement in respect of pension obligations and therefore also includes the cost of DC schemes.
2014
2013
Overseas Overseas
Overseas
Overseas
post
non-post
post
non-post
UK employment employment
Total
UK employment employment
Total
£m
£m
£m
£m
£m
£m
£m
£m
Current service cost
-
4.1
0.8
4.9
-
5.4
0.7
6.1
Past service (credit)/cost
-
(0.1)
-
(0.1)
-
0.7
-
0.7
Settlement/curtailment
(3.5)
(4.5)
-
(8.0)
-
(0.1)
-
(0.1)
Recognition of losses
-
-
1.0
1.0
-
-
0.3
0.3
DC employer contributions
3.4
5.4
-
8.8
3.5
5.6
-
9.1
Pension expense - operating costs
(0.1)
4.9
1.8
6.6
3.5
11.6
1.0
16.1
Interest on DBO
52.5
6.7
0.5
59.7
49.0
6.9
0.5
56.4
Interest on Assets
(52.4)
(4.2)
-
(56.6)
(44.7)
(3.4)
-
(48.1)
Interest expense - financing costs
0.1
2.5
0.5
3.1
4.3
3.5
0.5
8.3
The settlement gain in relation to the UK Funds arose following the splitting of the UK fund into two newly formed schemes. The £4.5m overseas settlement gain
relates to the buy-out of our Swedish scheme, a further £1.0m of payroll taxes were incurred as a result of this, resulting in a net settlement gain of £3.5m. Both
settlement gains have been treated as exceptional items in the income statement, see section 2.2.3.
The income statement charges and credits in the above table are presented on a total Group basis (i.e. including both continuing and discontinued operations).
The charges relating to discontinued operations contributed £nil (2013: £0.4m) to the current service cost, £nil (2013: £2.1m) to the DC employer contributions
and £nil (2013: £0.4m) to the net finance expense.
UK
Discount rate 0.1% pa lower
£17m
Inflation-linked pension increases 0.1% pa higher*
£11m
Increase of one year in life expectancy from age 65
£41m
10% fall in non-bond-like assets**
£42m
Overseas
Discount rate 0.1% pa lower
£4m
Salary increases 0.1% higher
£1m
Increase of one year in life expectancy at age 65
£7m
In each case all other assumptions are unchanged.
* This is an in-payment pension increase sensitivity
** Fund assets excluding cash, bonds, insurance policies and the Funds’ interest in the IMI Scottish Limited Partnership.
