88 | FINANCIAL STATEMENTS | Notes to the Consolidated Financial Statements
25. Pension benefits continued
F&C Netherlands The Plan in The Netherlands is financed via an insurance contract. There are no Trustees, but the Works Council participates in negotiations in respect of potential changes to the Plan.
F&C Ireland The Group operates a defined benefit pension scheme in Ireland. There are currently four Trustees of this plan, all of whom are employees of F&C.
(f) Future funding requirements FCAM Plan
A revised schedule of contributions was agreed in January 2011, under which the Group agreed to pay a minimum of 17.0% of Pensionable Salaries plus £3.0m per annum in respect of deficit recovery contributions, £0.5m per annum in respect of administrative expenses and any additional amounts required as a result of the asset underperformance guarantee. Further, to the extent that the Group repays any amount of its fixed or floating rate notes after 1 January 2011 then the Group shall pay, within one month of that repayment, a special contribution to reduce the deficit determined in the valuation at 31 March 2010 in the same proportion as the aggregate reduction in fixed or floating rate notes. If there is more than one such reduction then the special contributions necessary shall be computed taking into account the aggregate percentage reduction in fixed or floating rate notes since 1 January 2011 and the amount of any previous such special contribution paid. For the avoidance of doubt, a repayment does not include a repayment of the notes from the issue of a capital instrument specified for that purpose. The minimum estimated contribution expected to be paid into the Plan during 2012 is £5.5m (2011: £5.2m).
As the FCAM Plan is a closed scheme, under the projected unit method the current service cost will tend to increase as a percentage of pensionable salaries as the average age of members increases.
Non-UK schemes The figures in the table below assume that contributions will continue to be paid to the overseas schemes at the level paid in 2011, with appropriate increases for future changes in salary assumptions.
Contributions to defined benefit schemes Amounts paid into the Group’s defined benefit schemes in the past two years and expected future payments over the next five years are as follows:
Contributions paid 2010
2011
Expected future contributions 2012
2013 2014 2015 2016
(g) Risk management (i) FCAM Plan
The Trustees set general investment policy but delegate the responsibility for the selection of specific investments (other than investments in respect of members’ voluntary contributions) to the investment manager. The Trustees regularly monitor the FCAM Plan’s investments.
The Trustees seek advice from their investment advisor and believe they have sufficient skills and expertise to make investment decisions based on this advice.
The Trustees have set performance and risk targets for the investment manager. The performance objectives are long-term, and the Trustees monitor the investment manager on a regular basis in order to ensure that the scheme is on track to meet its long-term objectives.
The results of an asset-liability review undertaken alongside the 31 March 2010 actuarial valuation of the Plan have been used to assist the Trustees and the Group in managing volatility in the underlying investment performance and the risk of a significant increase in the FCAM Plan’s deficit by providing information used to determine the FCAM Plan’s investment strategy.
£m 9.0
6.6 £m
6.6 5.9 5.9 5.9 5.9
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