Interim results - 6 months ended 30 June 2007
17. Pension schemes
(a) Pension scheme deficits in consolidated balance sheet
On the consolidated balance sheet, the amount described as Provisions includes the pension scheme deficits and comprises:
| 30 June 2007 £m | 30 June 2006 £m | 31 December 2006 £m | |
|---|---|---|---|
| Deficits in the staff pension schemes | 131 | 784 | 1,029 |
| Other obligations to staff pension schemes - Insurance policies issued by Group companies | 1,117 | 1,057 | 1,086 |
| Total IAS 19 obligations to staff pension schemes | 1,248 | 1,841 | 2,115 |
| Restructuring provisions | 172 | 21 | 234 |
| Other provisions | 510 | 502 | 501 |
| Total provisions | 1,930 | 2,364 | 2,850 |
(b) Movements in the pension schemes' deficits comprise:
| 6 months 2007 £m | 6 months 2006 £m | Full year 2006 £m | |
|---|---|---|---|
| Deficits in the schemes at 1 January | (973) | (1,471) | (1,471) |
| Employer contributions | 166 | 241 | 554 |
| Charge to net operating expenses (see (c) below) | (107) | (70) | (160) |
| Credit to investment income | 44 | 38 | 77 |
| Actuarial gains | 824 | 459 | 3 |
| Acquisitions | (9) | - | (1) |
| Buy-outs and other transfers | - | 18 | 18 |
| Exchange rate movements in foreign plans | (3) | 1 | 7 |
| Deficits in the schemes at 30 June/31 December | (58) | (784) | (973) |
The current year surplus in the Irish schemes of £73 million (full year 2006: £56 million) is included in Other assets whilst the deficits in the other schemes of £131 million (full year 2006: £1,029 million) are included in provisions.
(c) The pension expense for these schemes comprises:
| 6 months 2007 £m | 6 months 2006 £m | Full year 2006 £m | |
|---|---|---|---|
| Current service cost | 87 | 97 | 196 |
| Past service cost | 3 | 2 | 3 |
| Loss/(gain) on curtailments | 17 | (29) | (39) |
| Charge to net operating expenses | 107 | 70 | 160 |
| Expected return on scheme assets | (300) | (265) | (530) |
| Less: income accounted for elsewhere | 24 | - | 40 |
| (276) | (265) | (490) | |
| Interest charge on scheme liabilities | 256 | 227 | 453 |
| Credit to investment income | (20) | (38) | (37) |
| Total charge to income | 87 | 32 | 123 |
| Expected return on scheme assets | 300 | 265 | 530 |
| Actual return on these assets | (319) | (133) | (800) |
| Actuarial (gains)/losses on scheme assets | (19) | 132 | (270) |
| Less: (losses)/gains accounted for elsewhere | (15) | - | 19 |
| Experience (gains)/losses arising on scheme liabilities | 8 | 22 | (63) |
| Changes in assumptions underlying the present value of the scheme liabilities | (813) | (613) | 430 |
| Loss on acquisitions | 9 | - | 1 |
| Actuarial (gains)/losses on the pension schemes | (830) | (459) | 117 |
| Less: Recoveries from unallocated divisible surplus and other movements | 84 | (14) | (3) |
| Actuarial (gains)/losses recognised in the statement of recognised income and expense | (746) | (473) | 114 |
The cumulative amount of actuarial gains and losses on the pension schemes recognised in the statement of recognised income and expenses since 1 January 2004 (the date of transition to IFRS) is a gain of £21 million at 30 June 2007 (31 December 2006: loss of £809 million).
