Page 11
(...Continued from page 10)
During the year Partners contributed £1.3m and the Partnership provided contributions of £0.9m. Partners are also able to top up their pension provision with Additional Voluntary Contributions (AVCs). During the year 17,900 Partners contributed £20.7m in AVCs. At the year end the combined defined contribution and AVC fund stood at £183.4m.
Actuarial valuation of the pension funds
A formal actuarial valuation is carried out at least once every three years by an independent professionally qualified actuary, in order to assess the amount of assets to be set aside to meet the pension promises, and to determine the future level of funding that the Partnership should put into the schemes. For the primary pension scheme, the last formal valuation was carried out as at 31 March 2007. The market value of the assets of the fund as at 31 March 2007 was £1,843m. The actuarial valuation of these assets showed that they were sufficient to cover 97% of the benefits which had accrued to members. There is also a senior scheme. The last valuation of this scheme was carried out as at 31 March 2007. The market value of the assets of the scheme as at 31 March 2007 was £22.0m. The actuarial valuation of these assets showed that they were sufficient to cover 73% of the benefits which had accrued to members.
Since March 2007, scheme assets have produced a lower than expected return, falling short by approximately £400m to £450m due to the unexpected fall in investment returns during 2008 of 20% as a result of adverse market conditions and the economic downturn. At the same time, inflation expectations worsened from 3.0% to approximately 3.8%, resulting in an increase in liabilities of approximately £200m to £250m. Taken together, these movements have increased the pension fund deficit by an estimate in the order of £650m to £700m.
The next formal actuarial valuation of both pension schemes will take place as at 31 March 2010 and will publish its results a year later.
Accounting valuation under IAS 19
IAS 19 requires the financial position of the group’s pension funds to be reassessed at each balance sheet reporting date following a prescribed methodology. This produces results that are different from, and more volatile than, the actuarial valuation, the purpose of which is to assess the funding requirements of the pension schemes. Pension commitments have been calculated based on the assumptions used for the most recent actuarial valuation, which have been updated by the actuaries to assess the assets and liabilities of the schemes as at 30 January 2010. The assets of the pension schemes as at 30 January 2010 were £1,948m (2009: £1,622m). (Continued on page 12...)
(Graph of Fund assets IAS 19 basis 2009 2010)
(Graph of pension liabilities and fund deficit 2009 2010)
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84