Consolidated financial statements - Rolls-Royce

109
Financial statements
Notes to the consolidated financial statements
19 Post-retirement benefits
The Group operates a number of defined benefit and defined contribution schemes.
For the UK defined benefit schemes, the assets are held in separate trustee administered funds and employees are entitled to retirement benefits based
on either their final or career average salaries and length of service.
Overseas defined benefit schemes are a mixture of funded and unfunded plans. Additionally in the US, and to a lesser extent in some other countries, the
Group’s employment practices include the provision of healthcare and life insurance benefits for retired employees. These schemes are unfunded.
The valuations of the defined benefit schemes are based on the most recent funding valuations, updated by the scheme actuaries to December 31, 2011.
The most recent funding valuations of the main UK schemes were:
Scheme
Valuation date
Rolls-Royce Pension Fund March 31, 2009
Rolls-Royce Group Pension Scheme April 5, 2010
Vickers Group Pension Scheme March 31, 2010
Amounts recognised in the income statement
UK
schemes
£m
2011 2010
Overseas
schemes
£m
Total
£m
UK
schemes
£m
Overseas
schemes
£m
Defined benefit schemes:
Current service cost 119 34 153 118 34 152
Past-service (credit)/cost (126) (68) (194) – 1 1
Curtailment – (2) (2) – (6) (6)
(7) (36) (43) 118 29 147
Defined contribution schemes 16 38 54 11 32 43
Operating cost 9 2 11 129 61 190
Financing in respect of defined benefit schemes:
Expected return on assets (381) (29) (410) (374) (26) (400)
Interest on liabilities 372 50 422 375 56 431
(9) 21 12 1 30 31
Total income statement charge – 23 23 130 91 221
Total
£m
The operating cost is charged as follows:
Defined benefit Defined contribution Total
2011
£m
Cost of sales – included in underlying profit 114 106 38 31 152 137
Cost of sales – excluded from underlying profit (204) – – – (204) –
Commercial and administrative costs 36 31 12 9 48 40
Research and development 11 10 4 3 15 13
(43) 147 54 43 11 190
2010
£m
2011
£m
2010
£m
2011
£m
2010
£m
The Group operates a PaySave scheme in the UK. This is a salary sacrifice scheme under which employees elect to stop making employee contributions
and the Group makes additional contributions in return for a reduction in gross contractual pay. As a result, there is a decrease in wages and salaries and
a corresponding increase in pension costs of £35m (2010 £35m) in the year.
Amounts recognised in the other comprehensive income
Actuarial gain on scheme assets 1,426 460
Experience losses on scheme liabilities (720) (303)
Movement in unrecognised surplus (683) (300)
Movement in minimum funding liability 100 49
123 (94)
2011
£m
2010
£m
Financial statements
Rolls-Royce Holdings plc Annual report 2011