Annual Report 2010 in PDF - BBA Aviation

19. Pensions and other post-retirement benef ts – continued
In accordance with IAS 19, and subject to materiality, the latest actuarial valuations of the Group’s defned beneft pension schemes and
healthcare plan have been reviewed and updated as at 31 December 2010. The following weighted average fnancial assumptions have
been adopted:
United Kingdom North America
2010 2009 2008 2010 2009 2008
p.a. (%)
Discount rate 5.4 5.5 6.4 5.2 5.8 6.0
Rate of increase to pensionable salaries 3.7 3.9 3.5 4.0 4.0 4.0
Price inflation 3.2 3.4 2.5 2.2 2.2 2.0
Rate of increase to pensions in payment 3.1 3.2 2.5 – – –
For the UK plan, the mortality assumptions are based on the recent actual mortality experience of members within the plan and the assumptions
also allow for future mortality improvements. The life expectancy assumptions applying to the UK plan as at 31 December 2010 are as follows:
2010 2009
Male Female Male Female
Life expectancy for a current 65 year old (years) 21.7 22.7 21.6 22.6
Life expectancy for a 65 year old in 15 years (years) 23.9 25.3 23.8 25.2
For the US post-retirement medical plan, the immediate trend rate for medical benefts was 8.5% which is assumed to reduce by 0.5% per annum
to 5.0% in 2018 onwards.
The fair value of the assets and liabilities of the schemes at each balance sheet date were:
United Kingdom North America Total
2010 2009 2008 2010 2009 2008 2010 2009 2008
£m £m £m £m £m £m £m £m £m
Assets
Equities 73.0 78.9 56.9 11.6 7.2 10.8 84.6 86.1 67.7
Government bonds 11.8 9.8 8.2 – – 7.2 11.8 9.8 15.4
Corporate bonds 27.6 23.1 25.2 9.1 3.1 1.6 36.7 26.2 26.8
Property 20.9 18.8 23.0 – – – 20.9 18.8 23.0
Insurance policies 263.6 279.2 221.6 – – – 263.6 279.2 221.6
Cash 7.4 1.4 8.3 2.4 10.5 1.0 9.8 11.9 9.3
Total fair value of scheme assets 404.3 411.2 343.2 23.1 20.8 20.6 427.4 432.0 363.8
Present value of defined benefit obligations 399.1 425.4 338.1 41.9 39.8 43.9 441.0 465.2 382.0
Asset not recognised 5.2 – 5.1 – – – 5.2 – 5.1
Minimum funding liability 15.3 – – – – – 15.3 – –
Liability recognised on the balance sheet (15.3) (14.2) – (18.8) (19.0) (23.3) (34.1) (33.2) (23.3)
At 31 December 2010 the update of the actuarial valuation of the UK Income and Protection Plan indicated a net surplus of £5.2 million.
In accordance with IAS 19, IFRIC 14 and the Group’s accounting policies, the surplus was restricted and no asset was recognised in the balance
sheet. Furthermore, an additional liability of £15.3 million has been recognised in respect of the UK plan, refecting the commitment to make
defcit contribution payments under the current recovery plan.
The funding policy for the United Kingdom and majority of the North American schemes is reviewed on a systematic basis in consultation
with the independent scheme actuary in order to ensure that the funding contributions from sponsoring employers are appropriate to meet the
liabilities of the schemes over the long term.
Included within other receivables in the balance sheet are £3.5 million (2009: £4.0 million) of listed investments which are held in trust for
the beneft of members of the North American schemes. These amounts are not included within the assets shown in the table above as they are
not controlled by the pension schemes in question.
Consolidated Financial Statements — 115