NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2008
17 Pension Costs
As explained in accounting policy note 1(m) the company is responsible for any deficit of the pension scheme for
which MDU Services Ltd is the principal employer. MDU Services Ltd provides a pension scheme that provides defined
benefits for employees who accepted employment before 1 January 2003, and defined contributions for employees
who accepted employment after 31 December 2002. The assets of the scheme are held under trust separately from
those of MDU Services Ltd. The funding of the scheme is based on regular triennial actuarial valuations. The last full
actuarial valuation of the scheme was carried out as at 31 March 2006 and has been updated to 31 December 2008 by
qualified independent actuaries for the purpose of reporting pension costs.
The major assumptions made by the actuary in the update were:
2008 2007 2006
Rate of increase in salaries 4.1% 4.5% 4.2%
Rate of increase in pensions pre 97 2.9% 3.4% 2.7%
Rate of increase in pensions post 97 2.9% 3.4% 3.1%
Discount rate 6.0% 5.8% 5.1%
Inflation assumption 3.0% 3.4% 3.1%
The mortality assumptions are based on standard mortality tables which allow for future mortality improvements.
The assumptions are that a member currently aged 65 will live on average for a further 21 years if they are male and a
further 24 years if they are female. For a member who retires in 2026 at the age of 65 the assumptions are they will
live on average for a further 22 years after retirement if they are male and a further 25 years after retirement if they
are female.
Long term rate of return expected:
2008 2007 2006
Equities 7.8% 7.5% 7.5%
Government bonds 4.0% 4.5% 4.5%
Corporate bonds 5.5% 4.8% 5.0%
Other 2.8% 4.9% 4.5%
Fair value:
£'000 £'000 £'000
Equities 30,600 40,100 37,200
Government bonds 15,700 14,000 12,700
Corporate bonds 6,600 5,900 5,400
Other 700 900 1,000
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