RBS 2003 Annual Report Download - page 193
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191
Annual Report and Accounts 2003
Notes on the accounts
2003 2002 2001
Prepaid pension cost: £m £m £m
Funded status (2,141) (1,844) 369
Unrecognised net actuarial loss 5,078 5,266 3,199
Unrecognised prior service cost 13 14 15
Unrecognised transition amount (14) (22) (30)
Prepaid pension cost at year end 2,936 3,414 3,553
2003 2002 2001
Components of net periodic pension cost: £m £m £m
Service cost 340 303 236
Interest cost 706 715 647
Expected return on plan assets (757) (901) (956)
Amortisation of prior service cost 1 1—
Amortisation of loss/(gain) 287 138 (6)
Amortisation of net transition asset (8) (8) (8)
Net periodic pension cost/(credit) 569 248 (87)
Assumptions
2003 2002 2001
Weighted average assumptions used at 31 December: % per annum % per annum % per annum
Discount rate for liabilities 5.60 5.75 6.00
Salary increases 3.95 3.50 4.25
Pension increases 2.70 2.25 2.50
Long-term rate of return on assets 7.20 7.20 7.30
2003 2002 2001
Weighted-average allocations of market value of plan assets at 31 December: %%%
Equity shares 65 67 63
Debt securities 32 31 33
Other 3 24
Total 100 100 100
At 31 December 2003 and 2001, the fund had a surplus of
assets over its accumulated benefit obligation and no minimum
liability was recognised. At 31 December 2002, the fund’s
accumulated benefit obligation was underfunded by £168
million. This resulted in a reduction in the accumulated other
comprehensive income component of US GAAP shareholders’
equity of £3,568 million, comprising the excess of the
accumulated benefit obligation over the market value of assets
of £168 million, prepaid pension cost of £3,414 million less
unrecognised prior service cost of £14 million. This was
reduced by deferred tax of £1,070 million.
Cash flows
The Group’s contribution to its main UK pension scheme in
2004 will be determined by the actuarial valuation to be
completed as at 31 March 2004. The following pension
payments under the main scheme, which reflect expected
future service, as appropriate, are expected to be paid:
£m
2004 445
2005 454
2006 462
2007 474
2008 489
After 2008 2,802