AstraZeneca Annual Report and Form 20-F Information 2011

Financial Statements18 Post-retirement benefits continuedRest of GroupThe IAS 19 positions as at 31 December 2011 are shown below for each of the other countries with significant defined benefit plans. These plansaccount for 91% of the Group’s defined benefit obligations outside of the UK. These plans are funded in line with the financing principles andcontributions paid as prescribed by the funding framework.> > The US defined benefits programme was actuarially revalued at 31 December 2011, when plan obligations were $1,987m and plan assetswere $1,593m. This includes obligations in respect of the non-qualified plan which is largely unfunded.> > The Swedish defined benefits programme was actuarially revalued at 31 December 2011, when plan obligations were estimated to amountto $1,545m and plan assets were $902m.> > The German defined benefits programme was actuarially revalued at 31 December 2011, when plan obligations amounted to $258m andplan assets were $23m.On current bases, it is expected that contributions (excluding those in respect of past service cost) during the year ended 31 December 2012to the four main countries will be $664m.Post-retirement benefits other than pensionsIn the US, and to a lesser extent in certain other countries, AstraZeneca’s employment practices include the provision of healthcare and lifeassurance benefits for retired employees. As at 31 December 2011, some 3,431 retired employees and covered dependants currently benefitfrom these provisions and some 10,694 current employees will be eligible on their retirement. AstraZeneca accrues for the present value ofsuch retiree obligations over the working life of the employee. In practice these benefits will be funded with reference to the financing principles.The cost of post-retirement benefits other than pensions for the Group in 2011 was $12m (2010: $18m; 2009: $19m). Plan assets were $290mand plan obligations were $330m at 31 December 2011. These benefit plans have been included in the disclosure of post-retirement benefitsunder IAS 19.Financial assumptionsQualified independent actuaries have updated the actuarial valuations under IAS 19 of the major defined benefit schemes operated by the Groupto 31 December 2011. The assumptions used by the actuaries are chosen from a range of possible actuarial assumptions which, due to thelong-term nature of the schemes, may not necessarily be borne out in practice. These assumptions were as follows:2011 2010UK Rest of Group UK Rest of GroupInflation assumption 3.2% 2.3% 3.6% 2.3%Rate of increase in salaries – 1 3.4% – 1 3.4%Rate of increase in pensions in payment 3.1% 0.9% 3.5% 0.9%Discount rate 4.8% 4.1% 5.5% 4.9%Long-term rate of return expected at 31 DecemberEquities 7.5% 7.4% 8.0% 7.9%Bonds 4.5% 3.8% 5.1% 5.0%Others 2.8% 3.8% 6.1% 4.7%Rate of increase in medical costs (initial rate) 10.0% 9.0% 10.0% 10.0%1Pensionable pay frozen at 30 June 2010 levels following UK fund changes.The expected return on assets is determined with reference to the expected long-term level of dividends, interest and other returns derived fromthe plan assets, together with realised and unrealised gains or losses on the plan assets, less any costs of administering the plan, less any taxpayable by the plan. The expected returns are based on long-term market expectations and analysed on a regular basis to ensure that anysustained movements in underlying markets are reflected.Demographic assumptionsThe mortality assumptions are based on country-specific mortality tables. These are compared to actual AstraZeneca experience and adjustedwhere sufficient data is available. Additional allowance for future improvements in life expectancy is included for all major schemes where thereis credible data to support this continuing trend.The table below illustrates life expectancy assumptions at age 65 for male members retiring in 2011 and members expected to retire in 2031(2010: 2010 and 2030 respectively).Life expectancy assumption for a male member retiring at age 65Country 2011 2031 2010 2030UK 22.9 24.7 22.7 24.6US 20.0 21.4 19.8 21.3Sweden 20.4 22.4 20.4 22.4Germany 18.3 21.0 17.9 20.7166 Financial StatementsAstraZeneca Annual Report and Form 20-F Information 2011