20495_Debenhams_AR_151104

NOTES TO THE FINANCIAL STATEMENTS
CONTINUED
For the financial year year ended ended 29 29 August August 2015 2015
23 Retirement benefit schemes
Defined contribution pension schemes
The Group operates defined contribution pension schemes for its employees. Group contributions to defined
contribution pension schemes during the financial year were £14.7 million (2014: £14.7 million).
Defined benefit pension schemes
The Group also operates defined benefit type pension schemes, being the Debenhams Executive Pension Plan
(“DEPP”) and the Debenhams Retirement Scheme (“DRS”) (together “the Group’s pension schemes”), the assets of
which are held in separate trustee-administered funds. The Group’s pension schemes were closed to future service
accrual from 31 October 2006. The closure to future accrual will not affect the pensions of those who have retired or
the deferred benefits of those who have left service or opted out before 31 October 2006.
The Group’s pension schemes are established under trust law and each has a corporate trustee that is required to run
the schemes in accordance with the scheme’s Trust Deed and Rules and to comply with the Pensions Act 2004 and all
relevant legislation. Responsibility for governance of the schemes lies with the trustee of each scheme. Each corporate
trustee is a company whose directors comprise of representatives:
• Appointed by the Group
• Nominated by scheme members
The chair of both corporate trustees is independent from the schemes and from the Group.
The most recent actuarial valuation of the Group’s pension schemes was carried out at 31 March 2014 and has been
used by KPMG LLP, a qualified independent actuary, when calculating the IAS 19 revised “Employee benefits” valuation
at 29 August 2015.
During June 2015, the Group agreed a recovery plan for the Group’s pension schemes, which was intended to restore
the schemes to a fully funded position on an ongoing basis. Under that agreement, the Group agreed to contribute
£9.5 million per annum to the pension schemes for the period from 1 April 2014 to 31 March 2022 increasing by the
percentage increase in RPI over the year to the previous December. The agreement replaced an agreement made in
2012 under which the Group agreed to contribute £8.9 million per annum to the pension schemes for the period from
1 April 2012 to 31 March 2022 increasing by the percentage increase in RPI over the year to the previous December.
Additionally during 2015, the Group agreed to continue to cover the non-investment expenses and levies of the pension
schemes, including those payable to the Pension Protection Fund. Employees make no further contributions to the
schemes. By funding its defined benefit pension schemes, the Group is exposed to the risk that the cost of meeting its
obligations is higher than anticipated. This could occur for several reasons, for example:
• Investment returns on the schemes’ assets may be lower than anticipated, especially if falls in asset values are not
matched by similar falls in the value of the schemes’ liabilities
• The level of price inflation may be higher than that assumed, resulting in higher payments from the schemes
• Scheme members may live longer than assumed
• Legislative changes could lead to an increase in the liabilities of the pension schemes
Investment of the schemes’ assets is managed by Hewitt Risk Management Services Limited under a delegated
consulting service agreement. As at 29 August 2015 most of the schemes’ assets were invested in a delegated
liability fund or a delegated growth fund.
The weighted average duration of the defined benefit obligation is 22 years (2014: 22 years).
The major assumptions used by the actuary were:
29 August 2015
per annum
%
30 August 2014
per annum
%
Inflation assumption 3.2 3.1
General salary and wage increase 3.2 3.1
Rate of increase in pension payments and deferred payments 3.2 3.1
Pension increase rate 3.0 2.9
Discount rate 3.8 3.9
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Debenhams plc Annual Report & Accounts & Accounts 2015 2015