Retirement benefit and other post-retirement obligations (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Principal Assumptions Used for UK Group Plan and US PRMB

The principal assumptions used for the UK Group plan and the US PRMB are shown below. Weighted average assumptions have been shown for the other plans, which primarily relate to US pension plans.

	2017						2016						2015
All figures in %	UK Group plan		Other plans		PRMB		UK Group plan		Other plans		PRMB		UK Group plan		Other plans		PRMB
Inflation		3.2		1.6		1.5		3.3		1.6		1.5		3.1		2.5		2.5
Rate used to discount plan liabilities		2.5		3.0		3.0		2.5		3.8		3.9		3.7		4.0		4.0
Expected rate of increase in salaries		3.7		3.0		3.0		3.8		3.0		3.0		3.6		3.0		3.0
Expected rate of increase for pensions in payment and deferred pensions		2.1 to 5.1		—		—		2.2 to 5.1		—		—		1.9 to 5.1		—		—
Initial rate of increase in healthcare rate		—		—		6.5		—		—		6.8		—		—		7.0
Ultimate rate of increase in healthcare rate		—		—		5.0		—		—		5.0		—		—		5.0

Summary of Remaining Average Life Expectancy in Years of Pensioner Retiring at Age 65

Using the above tables, the remaining average life expectancy in years of a pensioner retiring at age 65 on the balance sheet date for the UK Group plan and US plans is as follows:

	UK				US
All figures in years	2017		2016		2017		2016
Male		23.6		23.5		20.8		21.2
Female		25.7		25.6		22.8		23.2

The remaining average life expectancy in years of a pensioner retiring at age 65, 20 years after the balance sheet date, for the UK and US Group plans is as follows:

	UK				US
All figures in years	2017		2016		2017		2016
Male		25.7		25.5		22.5		22.9
Female		27.9		27.8		24.4		24.9

Summary of Amounts Recognised in Income Statement

The amounts recognised in the income statement are as follows:

	2017
All figures in £ millions	UK Group plan			Defined benefit other			Sub-total			Defined contribution		PRMB			Total
Current service cost		8			1			9			57		(1	)		65
Administration expenses		9			1			10			—		—			10
Total operating expense		17			2			19			57		(1	)		75
Interest on plan assets		(84	)		(5	)		(89	)		—		—			(89	)
Interest on plan liabilities		77			7			84			—		2			86
Net finance (income)/expense		(7	)		2			(5	)		—		2			(3	)
Net income statement charge		10			4			14			57		1			72

	2016
All figures in £ millions	UK Group plan			Defined benefit other			Sub-total			Defined contribution		PRMB			Total
Current service cost		8			2			10			67		—			77
Curtailments		—			—			—			—		(2	)		(2	)
Administration expenses		6			—			6			—		—			6
Total operating expense		14			2			16			67		(2	)		81
Interest on plan assets		(104	)		(6	)		(110	)		—		—			(110	)
Interest on plan liabilities		89			7			96			—		3			99
Net finance (income)/expense		(15	)		1			(14	)		—		3			(11	)
Net income statement charge		(1	)		3			2			67		1			70

	2015
All figures in £ millions	UK Group plan			Defined benefit other			Sub-total			Defined contribution		PRMB		Total
Current service cost		20			2			22			74		—		96
Curtailments		(3	)		—			(3	)		—		—		(3	)
Administration expenses		5			—			5			—		—		5
Total operating expense		22			2			24			74		—		98
Interest on plan assets		(98	)		(5	)		(103	)		—		—		(103	)
Interest on plan liabilities		90			7			97			—		2		99
Net finance (income)/expense		(8	)		2			(6	)		—		2		(4	)
Net income statement charge		14			4			18			74		2		94

Summary of Amounts Recognised in Balance Sheet

The amounts recognised in the balance sheet are as follows:

	2017												2016
All figures in £ millions	UK Group plan			Other funded plans			Other unfunded plans			Total			UK Group plan			Other funded plans			Other unfunded plans			Total
Fair value of plan assets		3,337			155			—			3,492			3,339			158			—			3,497
Present value of defined
benefit obligation		(2,792	)		(161	)		(20	)		(2,973	)		(3,181	)		(183	)		(22	)		(3,386	)
Net pension asset/(liability)		545			(6	)		(20	)		519			158			(25	)		(22	)		111
Other post-retirement medical benefit obligation											(67	)											(77	)
Other pension accruals											(11	)											(15	)
Net retirement benefit asset											441												19
Analysed as:
Retirement benefit assets											545												158
Retirement benefit obligations											(104	)											(139	)

Summary of Gains (Losses) Recognised in Other Comprehensive Income

The following gains/(losses) have been recognised in other comprehensive income:

All figures in £ millions	2017		2016			2015
Amounts recognised for defined benefit plans		175		(277	)		104
Amounts recognised for post-retirement medical benefit plans		—		9			6
Total recognised in year		175		(268	)		110

Summary of Fair Value of Plan Assets

The fair value of plan assets comprises the following:

	2017						2016
All figures in %	UK Group plan		Other funded plans		Total		UK Group plan		Other funded plans		Total
Insurance		29		—		29		—		—		—
Equities		1		1		2		2		1		3
Bonds		—		3		3		9		1		10
Property		8		—		8		8		—		8
Pooled asset investment funds		44		—		44		67		—		67
Other		14		—		14		12		—		12

Summary of of Quoted and Non Quoted Market Price

The table below further disaggregates the UK Group plan assets into additional categories and those assets which have a quoted market price in an active market and those that do not:

	2017				2016
All figures in %	Quoted market price		No quoted market price		Quoted market price		No quoted market price
Insurance		29		—		—		—
Non-UK equities		—		2		—		3
Fixed-interest securities		3		—		10		—
Property		—		8		—		8
Pooled asset investment funds		44		—		67		—
Other		—		14		—		12
Total		76		24		77		23

Summary of Liquidity Profile of UK Group Plan Assets

The liquidity profile of the UK Group plan assets is as follows:

All figures in %	2017		2016
Liquid – call <1 month		50		75
Less liquid – call 1-3 months		—		—
Illiquid – call >3 months		50		25

Summary of Changes in Values of Plan Assets and Liabilities

Changes in the values of plan assets and liabilities of the retirement benefit plans are as follows:

	2017									2016
All figures in £ millions	UK Group plan			Other plans			Total			UK Group plan			Other plans			Total
Fair value of plan assets
Opening fair value of plan assets		3,339			158			3,497			2,803			135			2,938
Exchange differences		—			(8	)		(8	)		—			24			24
Interest on plan assets		84			5			89			104			6			110
Return on plan assets excluding interest		(140	)		10			(130	)		445			8			453
Contributions by employer		234			8			242			99			2			101
Benefits paid		(188	)		(18	)		(206	)		(112	)		(17	)		(129	)
Other		8			—			8			—			—			—
Closing fair value of plan assets		3,337			155			3,492			3,339			158			3,497
Present value of defined benefit obligation
Opening defined benefit obligation		(3,181	)		(205	)		(3,386	)		(2,466	)		(175	)		(2,641	)
Exchange differences		—			13			13			—			(32	)		(32	)
Current service cost		(8	)		(1	)		(9	)		(8	)		(2	)		(10	)
Administration expenses		(9	)		(1	)		(10	)		(6	)		—			(6	)
Interest on plan liabilities		(77	)		(7	)		(84	)		(89	)		(7	)		(96	)
Actuarial gains/(losses) – experience		126			6			132			12			—			12
Actuarial gains/(losses) – demographic		133			1			134			(47	)		2			(45	)
Actuarial gains/(losses) – financial		44			(5	)		39			(689	)		(8	)		(697	)
Contributions by employee		—			—			—			—			—			—
Other		(8	)		—			(8	)		—			—			—
Benefits paid		188			18			206			112			17			129
Closing defined benefit obligation		(2,792	)		(181	)		(2,973	)		(3,181	)		(205	)		(3,386	)

Summary of Changes in Value of US PRMB

Changes in the value of the US PRMB are as follows:

All figures in £ millions	2017			2016
Opening defined benefit obligation		(77	)		(76	)
Exchange differences		5			(14	)
Current service cost		1			—
Curtailments		—			2
Interest on plan liabilities		(2	)		(3	)
Actuarial gains/(losses) – experience		1			8
Actuarial gains/(losses) – demographic		1			2
Actuarial gains/(losses) – financial		(2	)		(1	)
Benefits paid		6			5
Closing defined benefit obligation		(67	)		(77	)

Summary of Effect Percentage of Discount Rate Increase (Decrease) on Defined Benefit Obligation and Total Pension Expense

The effect of a one percentage point increase and decrease in the discount rate on the defined benefit obligation and the total pension expense is as follows:

	2017
All figures in £ millions	1% increase			1% decrease
Effect:
(Decrease)/increase in defined benefit obligation – UK Group plan		(423	)		575
(Decrease)/increase in defined benefit obligation – US plan		(14	)		16

The effect of members living one year more or one year less on the defined benefit obligation is as follows:

	2017
All figures in £ millions	One year increase		One year decrease
Effect:
Increase/(decrease) in defined benefit obligation – UK Group plan		145		(152	)
Increase/(decrease) in defined benefit obligation – US plan		8		(9	)

The effect of a half percentage point increase and decrease in the inflation rate is as follows:

	2017
All figures in £ millions	0.5% increase		0.5% decrease
Effect:
Increase/(decrease) in defined benefit obligation – UK Group plan		144		(132	)
Increase/(decrease) in defined benefit obligation – US plan		—		—

UK Group plan [member]

Summary of Defined Plan Analysis

At 31 December 2017, the UK Group plan had approximately 24,000 members, analysed in the following table:

All figures in %	Active		Deferred		Pensioners		Total
Defined benefit		1		26		35		62
Defined contribution		8		30		—		38
Total		9		56		35		100