20645_Scapa_AR_160504

NOTES ON THE ACCOUNTS CONTINUED
24. RETIREMENT BENEFIT OBLIGATIONS CONTINUED
– Funding arrangement
On 11 March 2013 Scapa Group plc agreed an asset-backed funding arrangement with the Trustees of the UK Pension Funds to help
address the UK pension funding deficit. The asset backed funding structure provided £3.75 million cash per annum to the UK Pension
Funds. The present value of this funding stream is recognised as an investment of the UK Pension Funds and removes the funding deficit
on actuarial valuation.
The contributions under the asset backed structure are as follows:
the arrangement provides a cash flow of £3.75m per year subject to RPI indexation
the company pays £0.35m per year subject to RPI indexation, towards the administration costs of the scheme
the company pays non-administration costs as agreed on a project by project basis with the trustee
Total cash payments in the year, including both deficit repair and expenses, were £4.4m (2015: £4.2m).
b) Overseas schemes
The Group operates a number of pension schemes in different countries. There are several small defined benefit schemes and a number of
defined contribution schemes. In addition, in certain countries, the Group must provide for various employee termination benefits. These are
accounted for as if they were defined benefit pension schemes. The total defined benefit pension charge to operating profit for the Group in
respect of overseas pension schemes for the year ended 31 March 2016 was [£0.4m] (2015: £0.4m), excluding settlement gains. The forecast
future contributions into these schemes are expected to be similar to the current year contributions, but are subject to the number and nature of
leavers in any period.
Details of the Group’s material overseas defined benefit schemes are as follows:
– North America
The Group operates three pension plans in North America, a funded defined benefit scheme and two unfunded pension plans. The defined
benefit scheme was closed during the prior year and all three schemes are therefore now closed to new members and future accrual. The
disclosures are based on the most recent actuarial valuations of liabilities and asset market values at 31 March 2016. During the year a lump
sum initiative was made available to certain deferred members. These members were able to elect to withdraw the value of their pension funds
from the scheme and place into private control. The value of the liabilities extinguished during this exercise were lower than the carrying value of
the assets transferred out of the scheme; the resulting gain has been treated as an exceptional settlement gain in the income statement.
– France
The Group operates an unfunded statutory retirement benefit scheme in France with liabilities of £3.8m (2015: £3.5m), with payments made to
employees on retirement.
– Italy
There is an unfunded statutory termination indemnity plan in Italy, with payments made to employees on retirement or termination of service.
The Italian scheme is closed to future accrual following changes in local legislation in 2013. It has liabilities of £0.5m (2015: £0.7m).
– Switzerland
The Group has an insured retirement fund in Switzerland that is accounted for under IAS 19.
Set out below are the key financial assumptions used to calculate scheme liabilities under IAS 19. Given the relative size of the schemes, the age
profile and sensitivities are only provided for the UK.
UK North America France Italy Switzerland
2016 2015 2016 2015 2016 2015 2016 2015 2016 2015
Discount rate 3.45% 3.40% 4.30% 4.67% 1.75% 1.35% 0.70% 0.60% 2.60% 2.60%
Salary rises – – – – 2.00% 2.00% – – 1.85% 1.85%
Price inflation (RPI) 2.85% 2.95% 2.50% 3.00% 2.00% 2.00% 2.00% 2.00% 1.40% 1.40%
Price inflation (CPI) 1.85% 1.95% – – – – – – – –
Future pension increases- RPI
max 5% 2.78% 2.95% – – – – – – – –
Future pension increases- RPI
max 3% 2.22% 2.60% – – – – – – – –
Amount of pension commuted
for cash 25.00% 25.00% – – – – – – – –
The salary increase assumption is no longer relevant in the UK and US as the schemes are closed to future accrual.
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SCAPA GROUP PLC ANNUAL REPORT AND ACCOUNTS 2016
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Annual Report and Accounts 2016 Scapa Group plc