HSBC 2004 Annual Report Download - page 337

335
2004 2003
% per annum % per annum
Discount rate United Kingdom ................................................................... 5.3 5.5
Hong Kong ........................................................................... 4.0 5.5
Jersey .................................................................................... 5.3 5.5
Brazil .................................................................................... 11.75 11.3
United States ........................................................................ 6.0 6.25
France ................................................................................... 4.5 5.25
Mexico .................................................................................. 10.75 10.75
Other ..................................................................................... 3.25 – 4.5 3.5 – 5.25
Return on assets United Kingdom ................................................................... 6.8 7.1
Hong Kong ........................................................................... 6.0 6.0
Jersey .................................................................................... 5.5 6.8
Brazil..................................................................................... 12.35 11.3
United States ........................................................................ 8.75 8.4
France.................................................................................... 5.4 5.4
Mexico .................................................................................. 12.5 7.0
Other ..................................................................................... 4.6 4.7
Rate of pay increase United Kingdom ................................................................... 3.2 3.0
Hong Kong ........................................................................... 4.0 4.5
Jersey .................................................................................... 4.45 4.25
Brazil .................................................................................... 5.0 5.11
United States ........................................................................ 3.75 3.75
France ................................................................................... 3.5 3.5
Mexico .................................................................................. 6.5 7.5
Other ..................................................................................... 2.25 – 2.5 2.5
In accordance with SFAS 132 (revised) ‘Employers’ Disclosures about Pensions and other Post-retirement
Benefits’ , the following disclosures are required in respect of HSBC’ s pension schemes:
Plan assets
HSBC Bank (UK) Pension
Scheme Other schemes
Expected
return on
assets
Target
allocation
Percentage of plan
assets at 31 December
Expected
return on
assets
Target
allocation
Percentage of plan
assets at 31 December
2005 2005 2004 2003 2005 2005 2004 2003
Asset category %% %%%% %%
Equity shares 8.1 53.0 57.7 56.2 8.1 46.5 45.7 53.1
Real estate .... 6.5 10.0 10.2 9.1 1.0 1.9 1.3 0.6
Debt securities 4.7 36.0 27.1 27.6 5.5 44.6 34.9 40.7
Other ............ 3.6 1.0 5.0 7.1 3.2 7.0 18.1 5.6
Total ............. 6.8 100.0 100.0 100.0 7.2 100.0 100.0 100.0
HSBC determines the expected return on plan assets in consultation with its actuary based upon historical
market returns, adjusted for additional factors such as the current rate of inflation and interest rates.
Plan objectives
The Trustees’ long-term investment objectives are to:
• Limit the risk of the assets failing to meet the liability of the Schemes over the long-term; and
• Maximise returns consistent with an acceptable level of risk so as to control the long-term costs of the
Defined Benefit Schemes.
The Trustees consider that the investment policy is consistent with meeting their overall long-term
investment objectives. In pursuit of these long-term objectives, the Trustees establish an overall benchmark
for the allocation of the Defined Benefit Schemes’ assets between asset categories. In addition each
permitted asset class has its own benchmarks, such as stock market or property valuation indices and desired
levels of out performance where relevant. This is intended to be reviewed at least triennially within 18
months of the date at which the actual valuation is made, or more frequently if circumstances require it. The
process involves an extensive asset and liability review.