Annual Report and Accounts 2012 - Scapa

25. Retirement benefit liabilities continued
Set out below are the key financial assumptions used to calculate scheme liabilities under IAS 19. Given the relative size of the
schemes, the age profile and sensitivities are only provided for the UK.
UK North America Korea France, Italy & Switzerland
2012 2011 2012 2011 2012 2011 2012 2011
Discount rate 4.75% 5.6% 4.75% 5.75% – – 2.6%-4.0% 4.25%-4.85%
Salary rises – – 4.0% 4.0% – – 1.85%-2.0% 2.0%
Price inflation (RPI) 3.0% 3.4% 3.0% 3.0% – – 2.0%-2.25% 2.25%
Price inflation (CPI) 2.2% 2.4% – – – – – –
Pension rises 2.6%-3.4% 2.8%-3.6% – – – – 1.4% –
Deferred pension rises 2.2% 2.4% – – – – – –
Due to the size of the Korean scheme a full actuarial valuation is not performed on an annual basis.
The salary increase assumption is no longer relevant in the UK as all UK schemes are now closed to future accrual. All UK schemes
include an allowance for administration expenses and PPF levy in the value of accrued benefits.
The expected investment returns have been calculated using the weighted average of the expected investment returns for the
different asset classes. The expected return on investments for the UK schemes are set out in the table below, the expected return on
investment for the overseas schemes is not a key judgement given the small asset values.
The IAS 19 calculations have been performed using PCx00 mortality tables adjusted to allow medium cohort and 1% improvements
per annum. The approximate average ages this translates to are shown below for the UK schemes:
UK
2012
Age to which current non-pensioners are expected to live:
– Men aged 55 now 85.0
– Women aged 55 now 88.7
Age to which current pensioners are expected to live:
– Men aged 68 now 85.9
– Women aged 68 now 88.9
Actuarial assumption sensitivities
The calculation of the schemes’ deficits is sensitive to changes in the underlying assumptions. The following tables show the
approximate effect of changes in the key assumptions on the UK schemes’ liabilities (and deficit) at the year end. These are
approximate and only show the likely effect of an assumption being adjusted whilst all other assumptions remain the same.
Note that sensitivities are not provided for the overseas schemes because the materiality of the results is not significant.
UK
2012
£m
Rate of inflation
Change in the year end liabilities from a 0.1% increase in the assumed rate of inflation (1.0)
Change in the year end liabilities from a 0.1% decrease in the assumed rate of inflation 1.0
Discount rate
Change in the year end liabilities from a 0.1% increase in the assumed rate of discount 2.1
Change in the year end liabilities from a 0.1% decrease in the assumed rate of discount (2.1)
Mortality
Change in assumptions to long cohort projection with a minimum of 0.75% improvement (6.6)
Scapa Group plc Annual Report and Accounts 2012 65
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