Guinness Peat Group plc

Notes to Financial Statements - Guinness Peat Group plc

30 GUINNESS PEAT GROUP PLC • ANNUAL REPORTNotes to Financial Statements – continued10. Pension Costs - continuedContributions paid during the year are based on a percentage of pensionable salaries (14% for SIRBS and 16.4% for Brunel) andamounted to £2.2 million (2003: £2.4 million). The contribution rates for future years for both SIRBS and Brunel are currentlyunder review. The pension charge under SSAP24 for the two schemes amounted to £2.2 million (2003: £2.5 million) and the netpension liability at the year end was £0.9 million (2003: £1.0 million).The Group has a liability in respect of former employees’ pensions currently being paid directly by GPGUKH, amounting to£43,955 (2003: £48,313) per annum. Provision has been made for the estimated liability based on actuarial advice. The keyassumptions made in arriving at the liability are as follows: an annual growth rate for pension payments of 2.75% (2003: 2.75%),an average life expectancy of 8 years (2003: 8 years) and a discount rate of 5.25% (2003: 5.5%).The charge for the year in respect of the Group’s defined contribution arrangements was £3.6 million (2003: £2.9 million).The following disclosures are made solely for the purposes of Financial Reporting Standard 17 (“FRS 17”) and do notinclude information in respect of schemes operated by joint ventures and associated undertakings:The major assumptions used by the actuaries in updating the valuations to 31 December 2004 for the purposes of FRS 17 were:31 December 31 December 31 December2004 2003 2002Discount rate 5.30% 5.50% 5.50%Rate of increase in salaries 3.80% 3.75% 3.25%Inflation 2.70% 2.75% 2.25%Rate of increase in pensions in payment 2.60% 3.00% 2.80%These assumptions are weighted averages across all the arrangements of the Group (UK, US and other jurisdictions).The assets in the schemes as at 31 December 2004 and the expected rates of return were:Long termexpected rateof return at31 December Funded Unfunded Total2004 £m £m £mEquities 8.2% 605.6 – 605.6Bonds 5.1% 1,184.7 – 1,184.7Other 6.3% 51.7 – 51.7Total market value of assets 1,842.0 – 1,842.0Present value of schemes’ liabilities (1,901.4) (67.8) (1,969.2)Gross deficit in the schemes (59.4) (67.8) (127.2)Irrecoverable surplus in the schemes (16.0) – (16.0)Net FRS17 deficit in the schemes (75.4) (67.8) (143.2)The effects of adopting the requirements of FRS17 on the primary financial statements are shown below:2004 2003 2002£m £m £mNet assets 578.3 447.7 382.6Less net pension liabilities/(assets) recognised under SSAP24 19.5 0.7 (0.3)Net assets excluding net pension liabilities/(assets) recognised under SSAP24 597.8 448.4 382.3Net pension liability under FRS17 (143.2) (41.5) (27.1)Net assets including FRS17 pension liability 454.6 406.9 355.2Profit and loss reserve 155.4 130.9 72.0Less net pension liabilities/(assets) recognised under SSAP24 19.5 0.7 (0.3)Profit and loss reserve excluding net pension liabilities/(assets)recognised under SSAP24 174.9 131.6 71.7Net pension liability under FRS17 (143.2) (41.5) (27.1)Adjusted FRS17 profit and loss reserve 31.7 90.1 44.6

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