British Land - Annual Report & Accounts 2003

Notes to the Financial Statements

26 Pensions
The British Land Group of Companies Pension Scheme (“the Scheme”) is the principal pension scheme in the Group. It is a defined benefit scheme which is externally funded and which is not contracted out of SERPS. The assets of the scheme are held in a trustee administered fund and kept separate from those of the company.

The pension cost relating to the Scheme has been determined in accordance with SSAP 24 by consulting actuaries Hewitt Bacon & Woodrow using the results of calculations as at 31 March 2000 based on the attained age method. The most significant actuarial assumptions are shown below. The financial assumptions are all lower than those used for the previous valuation reflecting the anticipation of lower rates of price inflation. At the 31 March 2000 valuation the market value of the Scheme's assets was £31.5m and on the assumptions used to calculate the pension cost, the actuarial value of the assets at that date represented 121% of the value of members' accrued benefits creating a surplus of £5.7m. Accrued benefits include all benefits for pensioners and other former members as well as benefits, based on service completed to date, for active members allowing for future salary rises.

The 31 March 2000 valuation does not take into account any impact of changes in general stock market values since that date. Any such impact will be reflected in the next actuarial valuation as at 31 March 2003, which is currently being prepared and the effects of which are not expected to be material to the Group. Subsequent pension costs will be determined on the basis of the 31 March 2003 valuation until the adoption of FRS 17 or its equivalent under International Accounting Standards.

The Company's contributions in respect of the Scheme for the year ended 31 March 2003 were £3.0m (2002: £2.9m). The Company's contributions over the year were based on the results of the valuation of the Scheme at 31 March 2000, and allow for the amortisation of the surplus revealed at that valuation over a period within the average remaining service life of members. The Scheme pension cost recognised in these Group Accounts is equal to the Company's contributions.

The Group has five other small pension schemes.

The total pension cost charged for the year was £3.5m (2002: £3.4m).

Additional disclosures regarding the Group's defined benefit pension scheme are required under the second year transitional provisions of FRS 17 Retirement benefits and these are set out below.

SSAP 24 disclosures
The assumptions used in the valuation were as follows:


Discount rate: pre-retirement		5.80% pa
Post-retirement		4.80% pa
Salary inflation		5.05% pa
Pensions increase		2.70% pa
Price inflation		2.80% pa

The employer’s contributions have been paid at the rate recommended by the actuary of 26.8%pa of basic salaries.


FRS 17 disclosures
The valuation has been updated to 31 March 2003 in accordance with FRS17 by the actuary. The major assumptions adopted for this purpose were:
	2003	2002
	% pa	% pa

Discount rate	5.50	6.00
Salary inflation	4.80	4.75
Pensions increase	2.50	2.50
Price inflation	2.60	2.50

The assets and liabilities of the scheme at 31 March 2003 and the expected return on assets over the following year were as follows:


	Expected		Expected
	return		return
	2003/4		2002/3
	%	£m	%	£m

Bonds	4.5	9.9	5.0	5.5
Equities	7.0	15.3	7.0	22.9
Other	4.0	3.0	4.5	0.2

Total assets		28.2		28.6
Liabilities		(36.8)		(27.2)

(Deficit) Surplus in scheme		(8.6)		1.4
Related deferred tax asset (liability)		2.6		(0.4)

Net pension (liability) asset		(6.0)		1.0

				2003 £m

Analysis of the amounts that would have been charged to operating profit under FRS17:
Current service cost				1.4

Analysis of the amounts that would have been credited to net finance income under FRS 17:
Expected return on pension scheme assets				1.9
Interest on pension scheme liabilities				(1.6)

				0.3

Analysis of the actuarial gain that would have been recognised in the statement of total recognised gains and losses:
Actual return less expected return on pension scheme assets				(4.4)
Experience gains and losses arising on the scheme liabilities				(1.7)
Changes in assumptions underlying the present value of the scheme liabilities				(5.8)

				(11.9)


History of experience gains and losses
				2003 £m

Difference between the expected and actual return on scheme assets:
Amount				(4.4)
Percentage of scheme assets				15.5%
Experience gain and losses on scheme liabilities:
Amount				(1.7)
Percentage of the present value of scheme liabilities				4.5%
Total actuarial loss recognised in the statement of total recognised gains and losses:
Amount				(11.9)
Percentage of the present value of scheme liabilities				32.4%


The analysis of reserves that would have arisen if FRS 17 had been fully implemented is as follows:
			2003	2002
			£m	£m

Profit and loss reserve excluding pension asset			673.7	712.5
Amount relating to defined benefit pension scheme (liability) asset			(8.6)	1.4

Profit and loss reserve			665.1	713.9

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