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 Group has five other small pension schemes. The total pension cost charged for the year was £3.7m (2004: £2.9m).
A full actuarial valuation of the scheme was carried out at 31 March 2003 and updated to 31 March 2004 and to 31 March 2005 by consulting actuaries, Hewitt Bacon & Woodrow. The employer’s contributions will be paid in the future at the rate recommended by the actuary of 38.5% pa of basic salaries. The major assumptions used for the actuarial valuation were:
| 2005 | 2004 | 2003 | |
| % pa | % pa | % pa | |
| Discount rate | 5.30 | 5.50 | 5.50 |
| Salary inflation | 5.10 | 5.10 | 4.80 |
| Pensions increase | 2.90 | 2.90 | 2.50 |
| Price inflation | 2.90 | 2.90 | 2.60 |
The assets and liabilities of the scheme at 31 March 2005 and the expected return on assets over the following year were as follows:
| Expected | Expected | Expected | ||||
| return | return | return | ||||
| 2005/6 | 2004/5 | 2003/4 | ||||
| % | £m | % | £m | % | £m | |
| Bonds | 4.5 | 19.1 | 4.5 | 17.0 | 4.5 | 9.9 |
| Equities | 7.0 | 31.4 | 7.0 | 26.8 | 7.0 | 15.3 |
| Other | 4.5 | 0.4 | 4.0 | 0.6 | 4.0 | 3.0 |
| Total assets | 50.9 | 44.4 | 28.2 | |||
| Liabilities | (55.2) | (44.3) | (36.8) | |||
| (Deficit) surplus in scheme | (4.3) | 0.1 | (8.6) | |||
| Related deferred tax asset | 1.3 | 2.6 | ||||
| Net pension (liability) asset | (3.0) | 0.1 | (6.0) |
The movement in the surplus (deficit) during the year is analysed below:
| 2005 | 2004 | |
| £m | £m | |
| Opening surplus (deficit) in the scheme | 0.1 | (8.6) |
| Current service cost | (2.7) | (2.1) |
| Past service cost | (0.7) | (0.3) |
| Employer contributions | 2.7 | 11.7 |
| Other finance income (cost) | 0.2 | (0.3) |
| Actuarial loss | (3.9) | (0.3) |
| Closing (deficit) surplus in the scheme | (4.3) | 0.1 |
| History of experience gains and losses | 2005 | 2004 | 2003 | |
| £m | £m | £m | ||
| Difference between the expected and actual return on scheme assets: | ||||
| Amount | 2.4 | 3.8 | (4.4) | |
| Percentage of scheme assets | 4.7% | 8.6% | 15.5% | |
| Experience gain and losses on scheme liabilities: | ||||
| Amount | (1.0) | 0.8 | (1.7) | |
| Percentage of the present value of scheme liabilities | 1.8% | 1.9% | 4.5% | |
| Changes in assumptions underlying the present value of the scheme liabilities | (5.3) | (4.9) | (5.8) | |
| Total actuarial loss recognised in the statement of total recognised gains and losses: | ||||
| Amount | (3.9) | (0.3) | (11.9) | |
| Percentage of the present value of scheme liabilities | 7.1% | 0.8% | 32.4% | |
| Deferred taxation attributable to pension movements | 1.2 | 0.1 | 3.6 | |
| Pension scheme movement for the year | (2.7) | (0.2) | (8.3) | |