XML 97 R60.htm IDEA: XBRL DOCUMENT

Provision for post-employment benefits (Tables)

12 Months Ended

Dec. 31, 2018

The Group’s pension costs are analysed as follows:


	2018 £m		2017 £m		2016 £m
Defined contribution plans		172.3		175.9		153.5
Defined benefit plans charge to operating profit		18.9		16.1		24.6
Pension costs (note 5)		191.2		192.0		178.1
Net interest expense on pension plans (note 6)		4.4		6.3		6.7
		195.6		198.3		184.8

Weighted Average Assumptions Used For Actuarial Valuations

The main weighted average assumptions used for the actuarial valuations at 31 December are shown in the following table:


	2018 % pa		2017 % pa		2016 % pa		2015 % pa
UK
Discount rate¹		2.8		2.4		2.5		3.7
Rate of increase in salaries²		n/a		n/a		3.5		3.1
Rate of increase in pensions in payment		4.3		4.1		4.1		3.9
Inflation		2.8		2.7		2.8		2.4
North America
Discount rate¹		4.1		3.5		3.8		4.0
Rate of increase in salaries		3.0		3.1		3.1		3.0
Inflation		n/a		4.0		4.0		2.5
Western Continental Europe
Discount rate¹		2.0		1.9		1.7		2.5
Rate of increase in salaries		2.3		1.9		2.0		2.3
Rate of increase in pensions in payment		1.2		1.2		1.3		1.6
Inflation		1.7		1.7		1.7		2.0
Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europe
Discount rate¹		5.0		4.2		4.2		4.2
Rate of increase in salaries		5.8		5.5		5.9		5.8
Inflation		3.6		4.0		4.0		4.0

Notes

Discount rates are based on high-quality corporate bond yields. In countries where there is no deep market in corporate bonds, the discount rate assumption has been set with regard to the yield on long-term government bonds.

The salary assumptions are no longer applicable to the UK as all plans were frozen since 2017. Active participants will not accrue additional benefits for future services under these plans.

Life Expectancies For Defined Benefit Pension Plans

At 31 December 2018, the life expectancies underlying the value of the accrued liabilities for the main defined benefit pension plans operated by the Group were as follows:


Years life expectancy after age 65	All plans		North America		UK		Western Continental Europe		Other¹
– current pensioners (at age 65) – male		22.2		22.1		23.2		21.1		17.0
– current pensioners (at age 65) – female		23.9		23.6		24.3		24.0		21.4
– future pensioners (current age 45) – male		24.0		23.7		24.8		23.5		17.0
– future pensioners (current age 45) – female		25.7		25.2		26.1		26.2		21.4

Note

Includes Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europe.

Weighted Average Duration of Defined Benefit Pension Obligations and Distribution of Timing of Benefit Payments

The following table provides information on the weighted average duration of the defined benefit pension obligations and the distribution of the timing of benefit payments for the next 10 years. The duration corresponds to the weighted average length of the underlying cash flows.


	All plans		North America		UK		Western Continental Europe		Other¹
Weighted average duration of the defined benefit obligation (years)		11.8		8.5		14.2		15.7		8.2
Expected benefit payments over the next 10 years (£m)
Benefits expected to be paid within 12 months		67.2		36.3		16.4		9.3		5.1
Benefits expected to be paid in 2020		58.4		34.3		12.9		8.6		2.5
Benefits expected to be paid in 2021		58.3		33.7		12.8		8.6		3.1
Benefits expected to be paid in 2022		59.1		33.6		12.7		9.1		3.6
Benefits expected to be paid in 2023		56.6		30.4		12.9		9.4		3.9
Benefits expected to be paid in the next five years		276.6		131.0		66.1		52.8		26.6

Note

Includes Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europe.

Sensitivity Analysis of Significant Actuarial Assumptions


	Increase/(decrease) in benefit obligation
Sensitivity analysis of significant actuarial assumptions	2018 £m			2017 £m
Discount rate
Increase by 25 basis points
UK		(9.8	)		(13.1	)
North America		(8.8	)		(9.9	)
Western Continental Europe		(8.7	)		(9.2	)
Other¹		(0.7	)		(0.6	)
Decrease by 25 basis points
UK		10.3			13.8
North America		9.1			10.2
Western Continental Europe		9.3			9.8
Other¹		0.7			0.6
Rate of increase in salaries
Increase by 25 basis points
North America		–			0.1
Western Continental Europe		1.3			1.5
Other¹		0.7			0.6
Decrease by 25 basis points
North America		–			(0.1	)
Western Continental Europe		(1.2	)		(1.5	)
Other¹		(0.6	)		(0.6	)
Rate of increase in pensions in payment
Increase by 25 basis points
UK		1.3			2.4
Western Continental Europe		5.3			6.2
Decrease by 25 basis points
UK		(0.8	)		(1.9	)
Western Continental Europe		(5.0	)		(5.8	)
Life expectancy
Increase in longevity by one additional year
UK		13.6			16.9
North America		5.7			6.0
Western Continental Europe		6.9			7.0

Note

Includes Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europe.

Fair Value of Assets and Assessed Present Value of Liabilities in Pension Plans

At 31 December, the fair value of the assets in the pension plans, and the assessed present value of the liabilities in the pension plans are shown in the following table:


	2018 £m			%		2017 £m			%		2016 £m			%
Equities		76.5			9.1		124.6			13.4		161.9			17.3
Bonds		544.9			64.8		520.0			55.9		566.0			60.6
Insured annuities		90.9			10.8		178.5			19.2		63.5			6.8
Property		0.9			0.1		1.3			0.1		1.6			0.2
Cash		31.1			3.7		9.9			1.1		44.9			4.8
Other		96.3			11.5		95.7			10.3		96.3			10.3
Total fair value of assets		840.6			100.0		930.0			100.0		934.2			100.0
Present value of liabilities		(1,024.0	)				(1,135.4	)				(1,209.8	)
Deficit in the plans		(183.4	)				(205.4	)				(275.6	)
Irrecoverable surplus		(0.9	)				(0.9	)				(0.9	)
Net liability¹		(184.3	)				(206.3	)				(276.5	)
Plans in surplus		42.8					43.9					28.0
Plans in deficit		(227.1	)				(250.2	)				(304.5	)

Note

The related deferred tax asset is discussed in note 15.

Surplus/(Deficit) in Plans by Region

All plan assets have quoted prices in active markets with the exception of insured annuities and other assets.


Surplus/(deficit) in plans by region	2018 £m			2017 £m			2016 £m
UK		33.7			31.5			20.0
North America		(68.7	)		(89.2	)		(133.8	)
Western Continental Europe		(104.6	)		(107.7	)		(116.9	)
Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europe		(43.8	)		(40.0	)		(44.9	)
Deficit in the plans		(183.4	)		(205.4	)		(275.6	)

Funded and Unfunded Pension Plans By Region

The following table shows the split of the deficit at 31 December between funded and unfunded pension plans.


	2018 Surplus/ (deficit) £m			2018 Present value of liabilities £m			2017 Surplus/ (deficit) £m			2017 Present value of liabilities £m			2016 Surplus/ (deficit) £m			2016 Present value of liabilities £m
Funded plans by region
UK		33.7			(290.5	)		31.5			(387.5	)		20.0			(406.4	)
North America		(4.6	)		(375.3	)		(21.4	)		(385.4	)		(56.0	)		(420.4	)
Western Continental Europe		(35.8	)		(168.4	)		(37.9	)		(173.3	)		(48.9	)		(180.9	)
Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europe		(6.6	)		(19.7	)		(4.2	)		(15.8	)		(5.8	)		(17.2	)
Deficit/liabilities in the funded plans		(13.3	)		(853.9	)		(32.0	)		(962.0	)		(90.7	)		(1,024.9	)

Unfunded plans by region
UK		–			–			–			–			–			–
North America		(64.1	)		(64.1	)		(67.8	)		(67.8	)		(77.8	)		(77.8	)
Western Continental Europe		(68.8	)		(68.8	)		(69.8	)		(69.8	)		(68.0	)		(68.0	)
Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europe		(37.2	)		(37.2	)		(35.8	)		(35.8	)		(39.1	)		(39.1	)
Deficit/liabilities in the unfunded plans		(170.1	)		(170.1	)		(173.4	)		(173.4	)		(184.9	)		(184.9	)

Deficit/liabilities in the plans		(183.4	)		(1,024.0	)		(205.4	)		(1,135.4	)		(275.6	)		(1,209.8	)

Pension Expense Charged to Operating Profit, Amounts Charged to Finance Costs and Amounts Recognised in Consolidated Statement of Comprehensive Income (OCI)

The following table shows the breakdown of the pension expense between amounts charged to operating profit, amounts charged to finance costs and amounts recognised in the consolidated statement of comprehensive income (OCI):


	2018 £m			2017 £m			2016 £m
Service cost¹		15.5			13.0			22.4
Administrative expenses		3.4			3.1			2.2
Charge to operating profit		18.9			16.1			24.6
Net interest expense on pension plans		4.4			6.3			6.7
Charge to profit before taxation for defined benefit plans		23.3			22.4			31.3
Return on plan assets (excluding interest income)		(43.9	)		13.4			66.3
Changes in demographic assumptions underlying the present value of the plan liabilities		3.8			12.7			6.7
Changes in financial assumptions underlying the present value of the plan liabilities		45.2			(17.0	)		(92.6	)
Experience gain arising on the plan liabilities		3.8			7.9			1.0
Change in irrecoverable surplus		–			–			2.7
Actuarial gain/(loss) recognised in OCI		8.9			17.0			(15.9	)

Note

Includes current service cost, past service costs related to plan amendments and (gain)/loss on settlements and curtailments.

Retirement benefit obligation [member]

Statement [LineItems]

Movement in Pension Plan Assets and Liabilities

The following table shows an analysis of the movement in the pension plan liabilities for each accounting period:


	2018 £m			2017 £m			2016 £m
Plan liabilities at beginning of year		1,135.4			1,209.8			1,039.9
Service cost¹		15.5			13.0			22.4
Interest cost		30.7			32.9			37.2
Actuarial (gain)/loss
Effect of changes in demographic assumptions		(3.8	)		(12.7	)		(6.7	)
Effect of changes in financial assumptions		(45.2	)		17.0			92.6
Effect of experience adjustments		(3.8	)		(7.9	)		(1.0	)
Benefits paid		(75.6	)		(79.7	)		(92.4	)
Loss/(gain) due to exchange rate movements		30.0			(36.4	)		124.2
Settlement payments²		(70.4	)		(1.2	)		(4.8	)
Other³		11.2			0.6			(1.6	)
Plan liabilities at end of year		1,024.0			1,135.4			1,209.8

Notes

Includes current service cost, past service costs related to plan amendments and (gain)/loss on settlements and curtailments.

In 2018, the Group completed the transfer of the defined benefit obligations for certain UK plans to an insurer resulting in £70.4 million settlement payments.

Other includes acquisitions, disposals, plan participants’ contributions and reclassifications. The reclassifications represent certain of the Group’s defined benefit plans which are included in this note for the first time in the periods presented.

Plan assets [member]

Statement [LineItems]

Movement in Pension Plan Assets and Liabilities

The following table shows an analysis of the movement in the pension plan assets for each accounting period:


	2018 £m			2017 £m			2016 £m
Fair value of plan assets at beginning of year		930.0			934.2			814.2
Interest income on plan assets		26.3			26.6			30.5
Return on plan assets (excluding interest income)		(43.9	)		13.4			66.3
Employer contributions		44.9			68.2			43.7
Benefits paid		(75.6	)		(79.7	)		(92.4	)
Gain/(loss) due to exchange rate movements		23.0			(28.7	)		78.8
Settlement payments¹		(70.4	)		(1.2	)		(4.8	)
Administrative expenses		(3.4	)		(3.1	)		(2.2	)
Other²		9.7			0.3			0.1
Fair value of plan assets at end of year		840.6			930.0			934.2
Actual return on plan assets		(17.6	)		40.0			96.8

Notes

In 2018, the Group completed the transfer of the defined benefit obligations for certain UK plans to an insurer resulting in £70.4 million settlement payments.