XML 216 R31.htm IDEA: XBRL DOCUMENT v3.23.1
Retirement benefit and other post-retirement obligations
 12 Months Ended
Dec. 31, 2022
Text block [abstract]  
Retirement benefit and other post-retirement obligations
25. Retirement benefit and other post-retirement obligations
Background
The Group operates a number of defined benefit and defined contribution retirement plans throughout the world.
The largest plan is the Pearson Pension Plan (UK Group plan) in the UK, which is sectionalised to provide both defined benefit and defined contribution pension benefits. The defined benefit section was largely closed to new members from 1 November 2006. The defined contribution section, opened in 2003, is open to new and existing employees. Finally, there is a separate section within the UK Group plan set up for auto-enrolment.
The defined benefit section of the UK Group plan is a final salary pension plan which provides benefits to members in the form of a guaranteed level of pension payable for life. The level of benefits depends on the length of service and final pensionable pay.
The defined contribution section of the UK Group plan operates a Reference Scheme Test (RST) pension underpin for its members. Where a member’s fund value is insufficient to purchase the RST pension upon retirement, the UK Group plan is liable for the shortfall to cover the member’s RST pension. In addition, in recent years, the scheme rules were amended to enable members who have sufficient funds to purchase an RST pension the ability to convert their fund value into a pension in the UK Group plan as an alternative to purchasing an annuity with an insurer. The Group recognises any assets and liabilities relating to these features of the defined contribution section as part of the overall UK Group plan obligation. From 1 January 2021, the Group also recognised the assets and liabilities for all members of the defined contribution section of the UK Group plan, accounting for the whole defined contribution section as a defined benefit scheme under IAS 19 ‘Employee Benefits’ as there is a risk the underpin will require the Group to pay further contributions to the scheme.
The UK Group plan is funded with benefit payments from trustee-administered funds. The UK Group plan is administered in accordance with the Trust Deed and Rules in the interests of its beneficiaries by Pearson Pension Trustee Limited.
At 31 December 2022, the UK Group plan had approximately 26,500 members, analysed in the following table:
 
         
All figures in %
   
            Active
     
            Deferred
     
            Pensioners
     
              Total   
  
         
Defined benefit
   
 
–
 
   
 
16
 
   
 
33
 
   
 
49  
 
         
Defined contribution
   
 
12
 
   
 
39
 
   
 
–
 
   
 
51  
 
         
Total
   
 
12
 
   
 
55
 
   
 
33
 
   
 
100  
 
The other major defined benefit plans are based in the US. These are also final salary pension plans which provide benefits to members in the form of a guaranteed pension payable for life, with the level of benefits dependent on length of service and final pensionable pay. The majority of the US plans are fully funded.
The Group also has several post-retirement medical benefit plans (PRMBs), principally in the US. PRMBs are unfunded but are accounted for and valued similarly to defined benefit pension plans.
The defined benefit schemes expose the Group to actuarial risks, such as life expectancy, inflation risks and investment risk including asset volatility and changes in bond yields. The Group is not exposed to any unusual, entity-specific or plan-specific risks.
     
 
          
 
    
  
 
 
 
Key judgements
 
 
        
   
 
Whether the Group will be eligible to receive the surplus associated with the UK Group Pension Plan in recognising a pension asset.
  
 
    
 
   
 

 
 
 
Key areas of estimation
 
 
        
   
 
The determination of the pension cost and defined benefit obligation of the Group’s defined benefit pension schemes depends on the selection of certain assumptions, which include the discount rate, inflation rate, salary growth and longevity.
        
   
 
    
     
 
          
Assumptions
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.
 
                     
                  
2022
    
 
                     
2021
                     
2020
  
                     
All figures in %
   
UK
Group
plan
     
        Other
plans
     
        PRMB
            
UK Group
plan
     
        Other
plans
     
        PRMB
     
      UK Group
plan
     
        Other
plans
     
        PRMB
  
                     
Inflation
   
 
3.4
 
   
 
2.0
 
   
 
–
  
           
 
3.3
 
   
 
1.4
 
   
 
–
 
   
 
2.9
 
   
 
0.6
 
   
 
–
 
                     
Rate used to discount plan liabilities
   
 
4.9
 
   
 
5.3
 
   
 
5.3
 
           
 
1.9
 
   
 
2.8
 
   
 
2.6
 
   
 
1.4
 
   
 
2.2
 
   
 
2.1
  
                     
Expected rate of increase in salaries
   
 
3.9
 
   
 
2.9
 
   
 
–
 
           
 
3.8
 
   
 
2.7
 
   
 
–
 
   
 
3.4
 
   
 
2.2
 
   
 
–
 
                     
Expected rate of increase for pensions in payment and
deferred pensions
   
 
1.95 to
5.20
  
 
   
 
–
 
   
 
–
 
           
 
2.35 to
 5.10
 
 
   
 
–
 
   
 
–
 
   
 
2.05 to
 5.05
 
 
   
 
–
 
   
 
–
 
                     
Initial rate of increase in healthcare rate
   
 
–
 
   
 
–
 
   
 
6.5
 
           
 
–
 
   
 
–
 
   
 
6.3
 
   
 
–
 
   
 
–
 
   
 
6.5
 
                     
Ultimate rate of increase in healthcare rate
   
 
–
 
   
 
–
 
   
 
5.0
 
  
 
 
 
   
 
–
 
   
 
–
 
   
 
5.0
 
   
 
–
 
   
 
–
 
   
 
5.0
 
The UK discount rate is based on corporate bond yields adjusted to reflect the duration of liabilities.
The inflation rate for the UK Group plan of 3.4% (2021: 3.3%) reflects the RPI rate. In line with changes to legislation in 2010, certain benefits have been calculated with reference to CPI as the inflationary measure and in these instances a rate of 2.7% (2021: 2.6%) has been used. The CPI rate is determined as a weighted average deduction from the RPI rate, and allows for the expected change to the formula for calculating RPI to be in line with CPIH from 2030 onwards.
For the UK Group plan, the mortality base table assumptions are derived from the SAPS S3 for males and females, adjusted to reflect the observed experience of the plan, with CMI model improvement factors. A 1.5% long-term rate improvement on the CMI 2021 model is applied for both males and females, with a weighting to 2021 mortality experience in the CMI model of 10% to make an approximate allowance for the impact of the
COVID-19
pandemic. The analysis of experience, and standard tables, do not reflect the impact of the ongoing
COVID-19
pandemic, the ultimate impact of which remains uncertain.
For the US plans, a mortality table (Pri – 2012) and 2021 improvement scale (MP – 2021) with generational projection for male and female annuitants has been adopted.
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
   
            2022
    
            2021
     
            2020
    
 
     
            2022
    
            2021
     
            2020
  
               
Male
   
 
22.5
  
  
 
22.6
 
   
 
24.0
  
           
 
20.6
  
  
 
20.5
 
   
 
  20.4
  
               
Female
   
 
24.7
 
  
 
24.8
 
   
 
24.3
 
  
 
 
 
   
 
22.6
 
  
 
22.5
 
   
 
22.4
 
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
   
            2022
    
            2021
     
            2020
    
 
     
            2022
    
            2021
     
            2020
  
               
Male
   
 
24.1
  
  
 
24.2
 
   
 
25.6
  
           
 
22.1
  
  
 
22.0
 
   
 
21.9
  
               
Female
   
 
26.4
 
  
 
26.5
 
   
 
26.1
 
  
 
 
 
   
 
24.0
 
  
 
23.9
 
   
 
23.8
 
Although the Group anticipates that plan surpluses will be utilised during the life of the plan to address member benefits, the Group recognises it’s pension surplus in full in respect of the UK Group plan on the basis that it is management’s judgement that there are no substantive restrictions on the return of residual plan assets in the event of a winding up of the plan after all member obligations have been met.
Financial statement information
The amounts recognised in the income statement are as follows:
 
     
                     
      
                     
      
                     
      
                     
      
                     
      
                     
  
             
                                            
2022
  
             
All figures in £ millions
   
UK Group
plan
     
Defined
benefit
other
     
Sub-total
     
Defined
contribution
     
PRMB
     
Total
  
             
Current service cost
   
 
17
 
   
 
2
 
   
 
19
 
   
 
46
 
   
 
–
 
   
 
65
 
             
Past service cost
   
 
3
 
   
 
–
 
   
 
3
 
   
 
–
 
   
 
–
 
   
 
3
 
             
Administration expenses
   
 
7
 
   
 
–
 
   
 
7
 
   
 
–
 
   
 
–
 
   
 
7
 
             
Total operating expense
   
 
27
 
   
 
2
 
   
 
29
 
   
 
46
 
   
 
–
 
   
 
75
 
             
Interest on plan assets
   
 
(77
) 
   
 
(3
) 
   
 
(80
) 
   
 
–
 
   
 
–
 
   
 
(80
) 
             
Interest on plan liabilities
   
 
67
 
   
 
3
 
   
 
70
 
   
 
–
 
   
 
1
 
   
 
71
 
             
Net finance (income)/expense
   
 
(10
) 
   
 
–
 
   
 
(10
) 
   
 
–
 
   
 
1
 
   
 
(9
) 
             
Net income statement charge
   
 
17
 
   
 
2
 
   
 
19
 
   
 
46
 
   
 
1
 
   
 
66
 
 
                                                                                                                                                                         
             
                                         
2021
  
             
All figures in £ millions
   
UK Group
plan
    
Defined
benefit
other
    
Sub-total
    
Defined
contribution
     
PRMB
     
Total
  
             
Current service cost
   
 
17
 
  
 
2
 
  
 
19
 
  
 
37
 
   
 
–
 
   
 
56
 
             
Past service cost
   
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
   
 
–
 
   
 
–
 
             
Administration expenses
   
 
6
 
  
 
–
 
  
 
6
 
  
 
–
 
   
 
–
 
   
 
6
 
             
Total operating expense
   
 
23
 
  
 
2
 
  
 
25
 
  
 
37
 
   
 
–
 
   
 
62
 
             
Interest on plan assets
   
 
(55
) 
  
 
(2
) 
  
 
(57
) 
  
 
–
 
   
 
–
 
   
 
(57
) 
             
Interest on plan liabilities
   
 
49
 
  
 
3
 
  
 
52
 
  
 
–
 
   
 
1
 
   
 
53
 
             
Net finance (income)/expense
   
 
(6
) 
  
 
1
 
  
 
(5
) 
  
 
–
 
   
 
1
 
   
 
(4
) 
             
Net income statement charge
   
 
17
 
  
 
3
 
  
 
20
 
  
 
37
 
   
 
1
 
   
 
58
 
 
                                                                                                                                                                         
             
                                         
2020
  
             
All figures in £ millions
   
UK Group
plan
    
Defined
benefit
other
    
Sub-total
    
Defined
contribution
     
PRMB
     
Total
  
             
Current service cost
   
 
6
 
  
 
2
 
  
 
8
 
  
 
47
 
   
 
–
 
   
 
55
 
             
Past service cost
   
 
1
 
  
 
–
 
  
 
1
 
  
 
–
 
   
 
–
 
   
 
1
 
             
Curtailments
   
 
–
 
  
 
(1
) 
  
 
(1
) 
  
 
–
 
   
 
–
 
   
 
(1
) 
             
Administration expenses
   
 
5
 
  
 
–
 
  
 
5
 
  
 
–
 
   
 
–
 
   
 
5
 
             
Total operating expense
   
 
12
 
  
 
1
 
  
 
13
 
  
 
47
 
   
 
–
 
   
 
60
 
             
Interest on plan assets
   
 
(66
) 
  
 
(3
) 
  
 
(69
) 
  
 
–
 
   
 
–
 
   
 
(69
) 
             
Interest on plan liabilities
   
 
57
 
  
 
5
 
  
 
62
 
  
 
–
 
   
 
1
 
   
 
63
 
             
Net finance (income)/expense
   
 
(9
) 
  
 
2
 
  
 
(7
) 
  
 
–
 
   
 
1
 
   
 
(6
) 
             
Net income statement charge
   
 
3
 
  
 
3
 
  
 
6
 
  
 
47
 
   
 
1
 
   
 
54
 
 
The amounts recognised in the balance sheet are as follows:
 
                   
                      
2022
                                
2021
  
                   
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
   
 
3,088
 
  
 
104
 
  
 
–
 
  
 
3,192
 
           
 
4,125
 
  
 
120
 
  
 
–
 
  
 
4,245
 
                   
Present value of defined benefit obligation
   
 
(2,514
) 
  
 
(106
) 
  
 
(17
) 
  
 
(2,637
) 
  
 
 
 
   
 
(3,588
) 
  
 
(123
) 
  
 
(20
) 
  
 
(3,731
) 
                   
Net pension asset/(liability)
   
 
574
 
  
 
(2
) 
  
 
(17
) 
  
 
555
 
           
 
537
 
  
 
(3
) 
  
 
(20
) 
  
 
514
 
                   
Other post-retirement medical benefit obligation
                           
 
(25
) 
                                   
 
(34
) 
                   
Other pension accruals
   
 
 
 
  
 
 
 
  
 
 
 
  
 
(10
) 
  
 
 
 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
(9
) 
                   
Net retirement benefit asset
   
 
 
 
  
 
 
 
  
 
 
 
  
 
520
 
  
 
 
 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
471
 
                   
Analysed as:
                                                                          
                   
Retirement benefit assets
                           
 
581
 
                                   
 
537
 
                   
Retirement benefit obligations
   
 
 
 
  
 
 
 
  
 
 
 
  
 
(61
) 
  
 
 
 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
(66
) 
 
The following gains/(losses) have been recognised in other comprehensive income:
 
                         
       
All figures in £ millions
   
              2022
    
                  2021
    
              2020
  
       
Amounts recognised for defined benefit plans
   
 
44
  
  
 
145
  
  
 
(24
) 
       
Amounts recognised for post-retirement medical benefit plans
   
 
10
 
  
 
4
 
  
 
1
 
       
Total recognised in year
   
 
54
 
  
 
149
 
  
 
(23
) 
 
The fair value of plan assets comprises the following:
 
                                                              
               
                  
2022
                           
2021
  
               
All figures in %
   
        UK Group
plan
     
Other
    funded plans
     
            Total
            
      UK Group
plan
     
Other
       funded plans
     
                Total
  
               
Insurance
   
 
33
 
   
 
–
 
   
 
33
 
           
 
35
 
   
 
–
 
   
 
35
  
               
Equities
   
 
15
 
   
 
1
 
   
 
16
 
           
 
11
 
   
 
1
 
   
 
12
 
               
Fixed interest securities
   
 
7
 
   
 
2
 
   
 
9
 
           
 
7
 
   
 
2
 
   
 
9
 
               
Property
   
 
6
 
   
 
–
 
   
 
6
 
           
 
5
 
   
 
–
 
   
 
5
 
               
Pooled asset investment funds (including LDI)
   
 
22
 
   
 
–
 
   
 
22
 
           
 
30
 
   
 
–
 
   
 
30
 
               
Other
   
 
14
 
   
 
–
 
   
 
14
 
  
 
 
 
   
 
9
 
   
 
–
 
   
 
9
 
 
The plan assets do not include any of the Group’s own financial instruments, or any property occupied by the Group. The table below further disaggregates the plan assets into those assets which have a quoted market price in an active market and those that do not:
 
 
           
           
2022
                   
2021
  
           
All figures in %
   
Quoted
  market price
     
No quoted
    market price
            
Quoted
  market price
     
No quoted
    market price
  
           
Insurance
   
 
33
 
   
 
–
  
           
 
35
 
   
 
–
  
           
Equities
   
 
16
 
   
 
–
 
           
 
11
 
   
 
1
 
           
Fixed-interest securities
   
 
9
 
   
 
–
 
           
 
9
 
   
 
–
 
           
Property
   
 
–
 
   
 
6
 
           
 
–
 
   
 
5
 
           
Pooled asset investment funds (including LDI)
   
 
22
 
   
 
–
 
           
 
30
 
   
 
–
 
           
Other
   
 
1
 
   
 
13
 
  
 
 
 
   
 
–
 
   
 
9
 
           
Total
   
 
81
 
   
 
19
 
  
 
 
 
   
 
85
 
   
 
15
 
The liquidity profile of the UK Group plan assets is as follows:
 
     
All figures in %
   
              
2022
    
              2021
  
     
Liquid – call <1 month
   
 
47
  
  
 
51
  
     
Less liquid – call 1–3 months
   
 
2
 
  
 
–
 
     
Illiquid – call >3 months
   
 
51
 
  
 
49
 
Changes in the values of plan assets and liabilities of the retirement benefit plans are as follows:
 
               
                
2022
                         
2021
  
               
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
   
 
4,125
 
  
 
120
 
  
 
4,245
 
           
 
3,588
 
  
 
119
 
  
 
3,707
 
               
Recognition of Money Purchase assets
   
 
–
 
  
 
–
 
  
 
–
 
           
 
513
 
  
 
–
 
  
 
513
 
               
Exchange differences
   
 
–
 
  
 
12
 
  
 
12
 
           
 
–
 
  
 
2
 
  
 
2
 
               
Interest on plan assets
   
 
77
 
  
 
3
 
  
 
80
 
           
 
55
 
  
 
2
 
  
 
57
 
               
Return on plan assets excluding interest
   
 
(1,000
) 
  
 
(18
) 
  
 
(1,018
) 
           
 
71
 
  
 
6
 
  
 
77
 
               
Contributions by employer
   
 
15
 
  
 
2
 
  
 
17
 
           
 
14
 
  
 
1
 
  
 
15
 
               
Benefits paid
   
 
(136
) 
  
 
(15
) 
  
 
(151
) 
           
 
(123
) 
  
 
(10
) 
  
 
(133
) 
               
Contributions by employees
   
 
7
 
  
 
–
 
  
 
7
 
  
 
 
 
   
 
7
 
  
 
–
 
  
 
7
 
               
Closing fair value of plan assets
   
 
3,088
 
  
 
104
 
  
 
3,192
 
  
 
 
 
   
 
4,125
 
  
 
120
 
  
 
4,245
 
               
Present value of defined benefit obligation
                                                          
               
Opening defined benefit obligation
   
 
(3,588
) 
  
 
(143
) 
  
 
(3,731
) 
           
 
(3,178
) 
  
 
(156
) 
  
 
(3,334
) 
               
Recognition of Money Purchase liabilities
   
 
–
 
  
 
–
 
  
 
–
 
           
 
(513
) 
  
 
–
 
  
 
(513
) 
               
Exchange differences
   
 
–
 
  
 
(14
) 
  
 
(14
) 
           
 
–
 
  
 
(1
) 
  
 
(1
) 
               
Disposals
   
 
–
 
  
 
1
 
  
 
1
 
           
 
–
 
  
 
–
 
  
 
–
 
               
Current service cost
   
 
(17
) 
  
 
(2
) 
  
 
(19
) 
           
 
(17
) 
  
 
(2
) 
  
 
(19
) 
               
Past service cost
   
 
(3
) 
  
 
–
 
  
 
(3
) 
           
 
–
 
  
 
–
 
  
 
–
 
               
Administration expenses
   
 
(7
) 
  
 
–
 
  
 
(7
) 
           
 
(6
) 
  
 
–
 
  
 
(6
) 
               
Interest on plan liabilities
   
 
(67
) 
  
 
(3
) 
  
 
(70
) 
           
 
(49
) 
  
 
(3
) 
  
 
(52
) 
               
Actuarial (losses)/gains – experience
   
 
(25
) 
  
 
(2
) 
  
 
(27
) 
           
 
(100
) 
  
 
3
 
  
 
(97
) 
               
Actuarial gains/(losses) – demographic
   
 
14
 
  
 
–
 
  
 
14
 
           
 
(1
) 
  
 
–
 
  
 
(1
) 
               
Actuarial gains – financial
   
 
1,050
 
  
 
25
 
  
 
1,075
 
           
 
160
 
  
 
6
 
  
 
166
 
               
Contributions by employees
   
 
(7
) 
  
 
–
 
  
 
(7
) 
           
 
(7
) 
  
 
–
 
  
 
(7
) 
               
Benefits paid
   
 
136
 
  
 
15
 
  
 
151
 
  
 
 
 
   
 
123
 
  
 
10
 
  
 
133
 
               
Closing defined benefit obligation
   
 
(2,514
) 
  
 
(123
) 
  
 
(2,637
) 
  
 
 
 
   
 
(3,588
) 
  
 
(143
) 
  
 
(3,731
) 
From 1 January 2021, the Group has recognised the assets and liabilities for all members of the defined contribution section of the UK Group plan, accounting for the whole defined contribution section as a defined benefit scheme under IAS 19 ‘Employee Benefits’. The net impact on the balance sheet was £nil, however, the gross amounts of £513m can be seen in the table above. Subsequent movements to those assets and liabilities are included in the relevant lines in the table above.
The weighted average duration of the defined benefit obligation is 13 years for the UK and six years for the US.
Changes in the value of the US PRMB are as follows:
 
                 
     
All figures in £ millions
   
              2022
    
              2021
  
     
Opening defined benefit obligation
   
 
(34
) 
  
 
(39
) 
     
Exchange differences
   
 
(3
) 
  
 
(1
) 
     
Interest on plan liabilities
   
 
(1
) 
  
 
(1
) 
     
Actuarial gains – experience
   
 
5
 
  
 
2
 
     
Actuarial gains – financial
   
 
5
 
  
 
2
 
     
Benefits paid
   
 
3
 
  
 
3
 
     
Closing defined benefit obligation
   
 
(25
) 
  
 
(34
) 
Funding
The UK Group plan is self-administered with the plan’s assets being held independently of the Group in trust. The trustee of the UK Group plan is required to act in the best interest of the plan’s beneficiaries. The most recent triennial actuarial valuation for funding purposes was completed as at 1 January 2021 and this valuation revealed a technical provision funding surplus of £160m. The UK Group plan expects to be able to provide benefits (in accordance with the plan rules) with a very low level of reliance on future funding from the Group.
Assets of the UK Group plan are divided into two main elements: liability matching assets and return seeking assets. The UK Group plan’s investment strategy allocates approximately 95% to matching assets and 5% to return-seeking assets.
Liability matching assets are assets that produce cash flows that can be expected to match the cash flows for a proportion of the membership, and include a liability-driven investment mandate (LDI) for which a Qualifying Investor Alternative Investment Fund (QIAIF) was established, managed by a subsidiary of Legal & General Investment Management. The QIAIF invests in UK bonds, interest rate/inflation swaps and other derivative instruments in order to reduce interest rate and inflation risks using accurate cash flow matching and risk control. Other liability matching assets include pensioner
buy-in
insurance policies, bonds and inflation-linked property and infrastructure.
Following the purchase of
buy-in
policies with Legal & General and Aviva in 2017 and 2019, 95% of the UK Group plan’s pensioner liabilities were matched with
buy-in
policies. These transfer significant longevity risk to Aviva and Legal & General, reducing the pension risks being underwritten by the Group and providing additional security for members.
Return-seeking assets are assets invested with a longer-term horizon to generate the returns needed to provide the remaining expected cash flows for the beneficiaries, and include diversified growth funds, property and alternative asset classes.
Recent economic and geopolitical uncertainty has increased volatility in the valuation of certain assets, in particular the LDI and insurance contracts. However, these movements are offset by equivalent movements in the defined benefit obligation. The UK Group plan divides its assets between a number of investment managers and across different types of assets, as such there is no significant concentration of risk.
Regular employer contributions to the UK Group plan in respect of the defined benefit sections are estimated to be £nil for 2023.
Sensitivities
 
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:
 
 
     
           
2022
  
     
All figures in £ millions
   
    1% increase
    
    1% decrease
  
     
Effect:
                 
     
(Decrease)/increase in defined benefit obligation – UK Group plan
   
 
(209
) 
  
 
261
  
     
(Decrease)/increase in defined benefit obligation – US plan
   
 
(7
) 
  
 
7
 
 
The effect of members living one year more or one year less on the defined benefit obligation is as follows:
 
 
 
 
 
 
  
  
 
 
2022
 
All figures in £ millions
   
          One year
increase
    
          One year
decrease
  
     
Effect:
                 
     
Increase/(decrease) in defined benefit obligation – UK Group plan
   
 
59
  
  
 
(59
) 
     
Increase/(decrease) in defined benefit obligation – US plan
   
 
3
 
  
 
(2
) 
The effect of a half percentage point increase and decrease in the inflation rate is as follows:
 
     
           
2022
  
     
All figures in £ millions
   
0.5% increase
    
0.5% decrease
  
     
Effect:
                 
     
Increase/(decrease) in defined benefit obligation – UK Group plan
   
 
59
  
  
 
(57
) 
     
Increase/(decrease) in defined benefit obligation – US plan
   
 
–
 
  
 
–
 
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant, although in practice this is unlikely to occur and changes in some assumptions may be correlated. When calculating these sensitivities, the same method has been applied to calculate the defined benefit obligation as has been applied when calculating the liability recognised in the balance sheet. This methodology is the same as prior periods.