Tesco plc Annual Report and Financial Statements 2012

OVERVIEW
Note 26 Post-employment benefits continued
STRATEGIC REVIEW PERFORMANCE REVIEW GOVERNANCE FINANCIAL STATEMENTS
Rates of return on scheme assets
The assets in the defined benefit pension schemes and the expected nominal rates of return are as follow:
Long-term
rate of return
%
2012 2011
Market
value
£m
Long-term
rate of return
%
Equities 8.1 3,377 8.5 3,032
Bonds 4.9 1,365 5.0 1,116
Property 6.5 577 6.8 511
Other (alternative assets) 8.1 741 8.5 564
Cash 3.6 109 4.0 385
Total market value of assets 6,169 5,608
The expected rate of return on assets is a weighted average based on the actual plan assets held and the respective returns expected on the separate
asset classes. The expected rates of return on equities and cash have both been set having regard to expected returns over the medium term, as calculated
by the Company’s independent actuary. The expected rate of return on bonds was measured directly from actual yields for gilts and corporate bond
stocks. The rates take into account the actual mix of UK gilts, UK corporate bonds and overseas bonds held at the balance sheet date.
Movement in pension deficit during the financial year
Changes in the fair value of defined benefit pension plan assets are as follows:
Opening fair value of plan assets 5,608 4,696
Expected return 422 363
Actuarial (losses)/gains (168) 278
Contributions by employer 457 433
Actual member contributions 11 10
Foreign currency translation (1) (9)
Benefits paid (160) (163)
Closing fair value of plan assets 6,169 5,608
Changes in the present value of defined benefit obligations are as follows:
Opening defined benefit obligation (6,964) (6,536)
Current service cost (495) (499)
Past service gain/(cost) 3 (29)
Interest cost (404) (381)
(Losses)/gains on change of assumptions (373) 342
Experience gain/(loss) 43 (25)
Foreign currency translation – 11
Benefits paid 160 163
Actual member contributions (11) (10)
Closing defined benefit obligation (8,041) (6,964)
The amounts that have been charged to the Group Income Statement and Group Statement of Comprehensive Income are set out below:
2012
2011
£m
Analysis of the amount charged to operating profit:
£m
Current service cost (495) (499)
Past service gain/(cost) 3 (29)
Total charge to operating profit
Analysis of the amount (charged)/credited to finance (cost)/income:
(492) (528)
Expected return on pension schemes’ assets 422 363
Interest on pension schemes’ liabilities (404) (381)
Net pension finance income/(cost) (Note 5) 18 (18)
Total charge to the Group Income Statement
Analysis of the amount recognised in the Group Statement of Comprehensive Income:
(474) (546)
Actual return less expected return on pension schemes’ assets (168) 278
Experience gains/(losses) arising on the schemes’ liabilities 43 (25)
Foreign currency translation – 2
Changes in assumptions underlying the present value of the schemes’ liabilities (373) 342
Total (loss)/gain recognised in the Group Statement of Comprehensive Income (498) 597
2012
£m
2012
£m
Market
value
£m
2011
£m
2011
£m
Tesco PLC Annual Report and Financial Statements 2012 135