IBRC annual report for 2011 - Irish Bank Resolution Corporation ...

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Notes to the financial statements continued11. Retirement benefits continuedSensitivity analysisSensitivity analysis for each of the principal assumptions used to measure the schemes' liabilities at 31 December 2011 is asfollows:Impact on scheme liabilitiesincrease by increase byChange in assumption % €mDiscount rate Decrease 0.5% 8.8% 7Rate of increase in salaries Increase 0.5% 0.5% -Inflation rate Increase 0.5% 1.9% 1Life expectancy Increase by 1 year 1.9% 1AssetsThe expected long term rate of return on assets of 3.0% (2010: 5.0%) at the year end is estimated based on the current level ofexpected returns on least risk investments (primarily government bonds), the historical level of the risk premium associated withthe other asset classes in which the portfolio is invested and the expectations for future returns of each asset class. Theexpected return for each asset class is then weighted based on the actual allocation to develop the long-term rate of return onassets assumption for the portfolio. The rate for the current year of 3.0% includes an adjustment of 0.6% to reflect the impactof the levy introduced by the Government on pension scheme assets for the four years from 2011 to 2014. The unexpected losson assets arising during 2011 from the application of the 0.6% levy is treated as an actuarial loss and is recognised in thestatement of comprehensive income.The market value of assets in the schemes and the expected long term rates of return were:% of Market % of MarketExpected scheme value Expected scheme valuereturn assets of assets return assets of assets2011 2011 2011 2010 2010 2010% % €m % % €mEquities 5.75 23 19 7.2 34 32Bonds 2.85 72 60 4.0 53 50Property 4.75 3 2 6.2 3 3Hedge funds 5.75 1 1 6.2 1 1Cash 2.00 1 1 2.0 9 8Total market value of schemes' assets83 94Actuarial value of liabilities of funded schemes (75) (93)Retirement benefit assets 8 1At 31 December 2011 the pension schemes held no ordinary shares in the parent Bank (2010: none).64
Irish Bank Resolution Corporation LimitedAnnual Report & Accounts 2011Components of pension expenseThe following table sets out the components of the defined benefit cost:Included in administrative expenses:Group and Bank2011 2010€m €mCurrent service cost 1 1Past service cost (13) -Expected return on assets of pension schemes (5) (5)Interest on liabilities of pension schemes 5 6Settlement gain - (1)Cost of providing defined retirement benefits (note 10) (12) 1The actual return on assets during the year ended 31 December 2011 was €2m (2010: €4m).Amount recognised in statement of comprehensive incomeThe GroupThe Bank2011 2010 2011 2010€m €m €m €mChange in assumptions underlying the present valueof schemes' liabilitiesExperience gains on liabilities of the pension schemesActual return less expected return on assets of thepension schemesActuarial losses recognised under IAS 19Deferred tax on actuarial lossesActuarial losses after tax(3) (10) (3) (10)- 4 - 4(3) (1) (3) (1)(6) (7) (6) (7)- - - -(6) (7) (6) (7)Cumulative amount of after tax actuarial lossesrecognised since 1 October 2004 in statementof comprehensive income to end of year(24) (18) (25) (19)Employer contributions to funded schemesThe expected employer contributions for defined benefit schemes for the year ending 31 December 2012 are €1m.The following tables provide information in respect of the assets and obligations of the Group's funded defined benefit pensionschemes.Reconciliation of the fair value of schemes' assets during the year2011 2010€m €mFair value of schemes' assets at beginning of year 94 98Expected return 5 5Contributions paid by employer 1 2Benefit payments (14) (10)Actuarial loss during year (3) (1)Fair value of schemes' assets at end of year 83 9465
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Irish Bank Resolution Corporation L
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ContentsIrish Bank Resolution Corpo
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Chairman’s statementIrish Bank Re
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Group Chief Executive’s reviewIri
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Group Chief Executive’s review co
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Business review continuedIrish Bank
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Business review continuedIrish Bank
Page 15 and 16: Business review continuedIrish Bank
Page 17 and 18: Board of DirectorsIrish Bank Resolu
Page 19 and 20: Corporate Responsibility continuedI
Page 21 and 22: Principal risks and uncertainties c
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Page 25 and 26: Report of the DirectorsIrish Bank R
Page 27 and 28: Corporate governance statementIrish
Page 29 and 30: Corporate governance statement cont
Page 31 and 32: Corporate governance statement cont
Page 33 and 34: OpinionIn our opinion:• the Group
Page 35 and 36: Consolidated statement of comprehen
Page 37 and 38: Bank statement of financial positio
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Irish Bank ResolutionCorporation Li
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