HSBC 2014 Annual Report Download - page 126

HSBC BANK PLC
Notes on the Financial Statements (continued)
124
Post-employment benefit plans
Accounting policy
The group operates a number of pension and other post-employment benefit plans throughout the world. These plans include both
defined benefit and defined contribution plans and various other post-employment benefits such as post-employment healthcare.
Payments to defined contribution plans and state-managed retirement benefit plans, where the group’s obligations under the plans
are equivalent to a defined contribution plan, are charged as an expense as the employees render service.
The defined benefit pension costs and the present value of defined benefit obligations are calculated at the reporting date by the
schemes’ actuaries using the Projected Unit Credit Method. The net charge to the income statement mainly comprises the service cost
and the net interest on the net defined benefit liability and is presented in operating expenses.
The past service cost which is charged immediately to the income statement, is the change in the present value of the defined benefit
obligation for employee service in prior periods, resulting from a plan amendment (the introduction or withdrawal of, or changes to, a
defined benefit plan) or curtailment (a significant reduction by the entity in the number of employees covered by a plan). A settlement
is a transaction that eliminates all further legal and constructive obligations for part or all of the benefits provided under a defined
benefit plan, other than a payment of benefits to, or on behalf of, employees that is set out in the terms of the plan and included in the
actuarial assumptions.
Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, return on plan assets (excluding
interest) and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in other comprehensive income.
Actuarial gains and losses comprise experience adjustments (the effects of differences between the previous actuarial assumptions
and what has actually occurred), as well as the effects of changes in actuarial assumptions.
The defined benefit liability recognised on the balance sheet represents the present value of defined benefit obligations reduced by
the fair value of plan assets. Any net defined benefit surplus is limited to the present value of available refunds and reductions in
future contributions to the plan.
The cost of obligations arising from other post-employment defined benefit plans, such as defined benefit health-care plans, are
accounted for on the same basis as defined benefit pension plans.
Income statement charge
2014
2013
£m
£m
Defined benefit pension plans
- HSBC Bank (UK) Pension Scheme
96
(198)
- Other plans
20
21
Defined contribution pension plans
196
175
Pension plans
312
(2)
Defined benefit healthcare plans
7
7
Year ended 31 December
319
5
Net assets/(liabilities) recognised on the balance sheet in respect of defined benefit plans
Fair value of
plan assets
Present value of
defined benefit
obligations
Total
£m
£m
£m
At 31 December 2014
HSBC Bank (UK) Pension Scheme
22,611
(19,555)
3,056
Other defined benefit pension plans
364
(581)
(217)
Defined benefit healthcare plans
–
(113)
(113)
Total
22,975
(20,249)
2,726
Total employee benefit liabilities (within ‘Accruals, deferred income and other liabilities’)
(333)
Total employee benefit assets (within ‘Prepayments, accrued income and other assets’)
3,059
At 31 December 2013
HSBC Bank (UK) Pension Scheme
19,156
(17,922)
1,234
Other defined benefit pension plans
354
(547)
(193)
Defined healthcare plans
–
(125)
(125)
Total
19,510
(18,594)
916
Total employee benefit liabilities (within ‘Accruals, deferred income and other liabilities’)
(318)
Total employee benefit assets (within ‘Prepayments, accrued income and other assets’)
1,234