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:
| 2007 £m |
2006 £m |
|
|---|---|---|
| Deficits in the staff pension schemes | 205 | 1,029 |
| Other obligations to staff pension schemes - Insurance policies issued by Group companies* | 1,025 | 1,086 |
| Total IAS 19 obligations to staff pension schemes | 1,230 | 2,115 |
| Restructuring provisions | 136 | 234 |
| Other provisions | 571 | 501 |
| Total provisions | 1,937 | 2,850 |
* Pension assets in Delta Lloyd include insurance policies of £1,025 million (2006: £1,086 million) which are non-transferable under the terms of IAS19 so have been transferred as other obligations to staff pension scheme within provisions above.
Of the total, £1,277 million (2006: £2,262 million) is expected to be settled more than one year after the balance sheet date.
(b) Movements in the pension schemes' deficits comprise:
| 2007 £m |
2006 £m |
|
|---|---|---|
| Deficits in the schemes at 1 January | (973) | (1,471) |
| Employer contributions | 297 | 554 |
| Charge to net operating expenses (see (c) below) | (188) | (160) |
| Credit to investment income | 99 | 77 |
| Actuarial gains | 612 | 3 |
| Acquisitions | (19) | (1) |
| Buy-outs and other transfers | - | 18 |
| Exchange rate movements in foreign plans | (6) | 7 |
| Deficits in the schemes at 31 December | (178) | (973) |
The current year surplus in the Irish schemes of £27 million (2006: £56 million) is included in Other assets whilst the deficits in the other schemes of £205 million (2006: £1,029 million) are included in provisions.
(c) The pension expense for these schemes comprises:
| 2007 £m |
2006 £m |
|
|---|---|---|
| Current service cost | 173 | 196 |
| Past service cost | - | 3 |
| Loss/(gain) on curtailments | 15 | (39) |
| Total pension cost | 188 | 160 |
| Charged to net operating expenses | 188 | 196 |
| Included in profit on disposal of subsidiaries and associates | - | (36) |
| Total pension cost as above | 188 | 160 |
| Expected return on scheme assets | (614) | (530) |
| Less: income accounted for elsewhere | 49 | 40 |
| (565) | (490) | |
| Interest charge on scheme liabilities | 515 | 453 |
| Credit to investment income | (50) | (37) |
| Total charge to income | 138 | 123 |
| Expected return on scheme assets | 614 | 530 |
| Actual return on these assets | (404) | (800) |
| Actuarial (gains)/losses on scheme assets | 210 | (270) |
| Less: (losses)/gains accounted for elsewhere | (72) | 19 |
| Experience (gains)/losses arising on scheme liabilities | 80 | (63) |
| Changes in assumptions underlying the present value of the scheme liabilities | (902) | 430 |
| Loss on acquisitions | 36 | 1 |
| Actuarial (gains)/losses recognised in the statement of recognised income and expense | (648) | 117 |
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 loss of £161 million at 31 December 2007 (2006: loss of £809 million).
