GSK Annual Report 2002

116 GlaxoSmithKline Notes to the financial statements
33 Employee costs continued
FRS 17 disclosures
The Group continues to account for pension arrangements in accordance with SSAP 24 ‘Accounting for Pension Costs’. Under the
transitional provisions of FRS 17 ‘Retirement Benefits’ certain disclosures are required on the basis of the valuation methodology adopted
by FRS 17. For defined benefit schemes the fair values of pension scheme assets at 31st December 2002 are compared with the future
pension liabilities calculated under the projected unit method applying the following assumptions:
UK USA Rest of World
2002 2001 2002 2001 2002 2001
% pa % pa % pa % pa % pa % pa
Rate of increase of future earnings 3.75 4.0 5.5 5.5 3.0 3.5
Discount rate 5.75 6.0 6.75 7.25 4.75 4.75
Expected pension increases 2.25 2.5 n/a n/a 1.5 1.0
Cash balance credit/conversion rate n/a n/a 5.75 6.25 n/a n/a
Inflation rate 2.25 2.5 2.25 3.5 1.5 1.5
The expected long-term rates of return on the assets and the fair values of the assets and liabilities of the UK and US defined benefit
schemes, together with aggregated data for other defined benefit schemes in the Group are as follows:
UK USA Rest of World Group
Average
At 31st December 2002 Expected rate Fair Expected rate Fair expected rate Fair Fair
of return value of return value of return value value
% £m % £m % £m £m
Equities 8.25 2,523 9.25 804 6.75 172 3,499
Property – – 7.0 53 7.0 5 58
Bonds 4.5 299 6.25 265 4.5 145 709
Other assets 4.0 137 1.5 240 1.75 9 386
Fair value of assets 2,959 1,362 331 4,652
Present value of scheme liabilities (4,153) (1,782) (578) (6,513)
(1,194) (420) (247) (1,861)
Value of schemes in surplus 11 11
Deferred tax liability (3) (3)
8 8
Value of schemes in deficit (1,194) (420) (258) (1,872)
Deferred tax asset 358 147 97 602
(836) (273) (161) (1,270)
Group total (1,262)
Other assets in the UK and US schemes include the special contributions paid in December 2002. These will be allocated to equities and bonds
in 2003.
UK USA Rest of World Group
Average
At 31st December 2001 Expected rate Fair Expected rate Fair expected rate Fair Fair
of return value of return value of return value value
% £m % £m % £m £m
Equities 8.5 3,234 9.5 1,220 7.25 193 4,647
Property – – 8.0 54 7.5 3 57
Bonds 5.0 411 7.0 250 5.0 107 768
Other assets 4.5 70 5.0 12 3.25 10 92
Fair value of assets 3,715 1,536 313 5,564
Present value of scheme liabilities (3,970) (1,781) (527) (6,278)
(255) (245) (214) (714)
Value of schemes in surplus 42 24 66
Deferred tax liability (13) (7) (20)
29 17 46
Value of schemes in deficit (297) (245) (238) (780)
Deferred tax asset 89 93 95 277
(208) (152) (143) (503)
Group total (457)