Retirement benefit and other post-retirement obligations (Tables)

12 Months Ended

Dec. 31, 2018

At 31 December 2018, the UK Group plan had approximately 24,000 members, analysed in the following table:


All figures in %	Active		Deferred		Pensioners		Total
Defined benefit		1		25		35		61
Defined contribution		9		30		—		39

Total		10		55		35		100

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.


	2018						2017						2016
All figures in %	UK Group plan		Other plans		PRMB		UK Group plan		Other plans		PRMB		UK Group plan		Other plans		PRMB
Inflation		3.3		1.6		1.5		3.2		1.6		1.5		3.3		1.6		1.5
Rate used to discount plan liabilities		2.8		4.0		4.1		2.5		3.0		3.0		2.5		3.8		3.9
Expected rate of increase in salaries		3.8		2.9		3.0		3.7		3.0		3.0		3.8		3.0		3.0
Expected rate of increase for pensions in payment and deferred pensions		2.1 to 5.1		—		—		2.1 to 5.1		—		—		2.2 to 5.1		—		—
Initial rate of increase in healthcare rate		—		—		7.0		—		—		6.5		—		—		6.8
Ultimate rate of increase in healthcare rate		—		—		5.5		—		—		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:

All figures in years

2018

2017

2018

2017

Male

23.8

23.6

20.7

20.8

Female

24.5

25.7

22.7

22.8

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:

All figures in years

2018

2017

2018

2017

Male

25.4

25.7

22.3

22.5

Female

26.3

27.9

24.2

24.4

Summary of Amounts Recognised in Income Statement

The amounts recognised in the income statement are as follows:


	2018
All figures in £ millions	UK Group plan			Defined benefit other			Sub-total			Defined contribution		PRMB			Total
Current service cost		7			2			9			56		(1	)		64
Past service cost		8			—			8			—		—			8
Curtailments		—			—			—			—		(11	)		(11	)
Administration expenses		6			—			6			—		—			6

Total operating expense		21			2			23			56		(12	)		67
Interest on plan assets		(82	)		(5	)		(87	)		—		—			(87	)
Interest on plan liabilities		68			6			74			—		2			76

Net finance (income)/expense		(14	)		1			(13	)		—		2			(11	)

Net income statement charge		7			3			10			56		(10	)		56


	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

Summary of Amounts Recognised in Balance Sheet

The amounts recognised in the balance sheet are as follows:


	2018												2017
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		3,240			141			—			3,381			3,337			155			—			3,492
Present value of defined benefit obligation		(2,671	)		(158	)		(19	)		(2,848	)		(2,792	)		(161	)		(20	)		(2,973	)

Net pension asset/(liability)		569			(17	)		(19	)		533			545			(6	)		(20	)		519
Other post-retirement medical benefit obligation											(49	)											(67	)
Other pension accruals											(13	)											(11	)

Net retirement benefit asset											471												441

Analysed as:
Retirement benefit assets											571												545
Retirement benefit obligations											(100	)											(104	)

Summary of Gains (Losses) Recognised in Other Comprehensive Income

The following gains have been recognised in other comprehensive income:


All figures in £ millions	2018		2017		2016
Amounts recognised for defined benefit plans		16		175		(277	)
Amounts recognised for post-retirement medical benefit plans		6		—		9

Total recognised in year		22		175		(268	)

Summary of Fair Value of Plan Assets

The fair value of plan assets comprises the following:


	2018						2017
All figures in %	UK Group plan		Other funded plans		Total		UK Group plan		Other funded plans		Total
Insurance		28		1		29		29		—		29
Equities		1		1		2		1		1		2
Bonds		—		2		2		—		3		3
Property		7		—		7		8		—		8
Pooled asset investment funds		44		—		44		44		—		44
Other		16		—		16		14		—		14

Summary of of Quoted and Non Quoted Market Price

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


	2018				2017
All figures in %	Quoted market price		No quoted market price		Quoted market price		No quoted market price
Insurance		29		—		29		—
Non-UK equities		—		2		—		2
Fixed-interest securities		2		—		3		—
Property		—		7		—		8
Pooled asset investment funds		44		—		44		—
Other		—		16		—		14

Total		75		25		76		24

Summary of Liquidity Profile of UK Group Plan Assets

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


All figures in %	2018		2017
Liquid – call <1 month		51		50
Less liquid – call 1–3 months		—		—
Illiquid – call >3 months		49		50

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:


	2018									2017
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		3,337			155			3,492			3,339			158			3,497
Exchange differences		—			4			4			—			(8	)		(8	)
Interest on plan assets		82			5			87			84			5			89
Return on plan assets excluding interest		(45	)		(13	)		(58	)		(140	)		10			(130	)
Contributions by employer		6			1			7			234			8			242
Benefits paid		(140	)		(11	)		(151	)		(188	)		(18	)		(206	)
Other		—			—			—			8			—			8

Closing fair value of plan assets		3,240			141			3,381			3,337			155			3,492

Present value of defined benefit obligation
Opening defined benefit obligation		(2,792	)		(181	)		(2,973	)		(3,181	)		(205	)		(3,386	)
Exchange differences		—			(3	)		(3	)		—			13			13
Current service cost		(7	)		(2	)		(9	)		(8	)		(1	)		(9	)
Past service cost		(8	)		—			(8	)		—			—			—
Administration expenses		(6	)		—			(6	)		(9	)		(1	)		(10	)
Interest on plan liabilities		(68	)		(6	)		(74	)		(77	)		(7	)		(84	)
Actuarial gains/(losses) – experience		(49	)		(2	)		(51	)		126			6			132
Actuarial gains/(losses) – demographic		(12	)		—			(12	)		133			1			134
Actuarial gains/(losses) – financial		131			6			137			44			(5	)		39
Contributions by employee		—			—			—			—			—			—
Other		—			—			—			(8	)		—			(8	)
Benefits paid		140			11			151			188			18			206

Closing defined benefit obligation		(2,671	)		(177	)		(2,848	)		(2,792	)		(181	)		(2,973	)

Summary of Changes in Value of US PRMB

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


All figures in £ millions	2018			2017
Opening defined benefit obligation		(67	)		(77	)
Exchange differences		(2	)		5
Current service cost		1			1
Curtailments		11			—
Interest on plan liabilities		(2	)		(2	)
Actuarial gains/(losses) – experience		4			1
Actuarial gains/(losses) – demographic		—			1
Actuarial gains/(losses) – financial		2			(2	)
Benefits paid		4			6

Closing defined benefit obligation		(49	)		(67	)

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:


	2018
All figures in £ millions	1% increase			1% decrease
Effect:
(Decrease)/increase in defined benefit obligation – UK Group plan		(386	)		522
(Decrease)/increase in defined benefit obligation – US plan		(11	)		13

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


	2018
All figures in £ millions	One year increase		One year decrease
Effect:
Increase/(decrease) in defined benefit obligation – UK Group plan		143		(138	)
Increase/(decrease) in defined benefit obligation – US plan		7		(8	)

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


	2018
All figures in £ millions	0.5% increase		0.5% decrease
Effect:
Increase/(decrease) in defined benefit obligation – UK Group plan		129		(114	)
Increase/(decrease) in defined benefit obligation – US plan		—		—