RBS 2005 Annual Report Download - page 152

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Notes on the accounts
3 Pension costs
The Group operates a number of pension schemes which are predominantly defined benefit schemes whose assets are independent of
the Group’s finances. In addition to The Royal Bank of Scotland Group Pension Fund (‘Main Scheme’), the Group operates a number of
other UK and overseas pension schemes.
It also provides other post-retirement benefits, principally through subscriptions to private healthcare schemes in the UK and the US and
unfunded post-retirement benefit plans. Provision for the costs of these benefits is charged to the income statement over the average
remaining future service lives of the eligible employees. The amounts are not material.
Interim valuations of the Group’s schemes were prepared to 31 December by independent actuaries, using the following assumptions:
Main Scheme All Schemes
Principal actuarial assumptions at 31 December (weighted average) 2005 2004 2005 2004
Discount rate 4.8% 5.4% 4.8% 5.4%
Expected return on plan assets 6.5% 6.7% 6.5% 6.8%
Rate of increase in salaries 4.0% 4.0% 3.9% 3.9%
Rate of increase in pensions in payment 2.7% 2.7% 2.6% 2.7%
Inflation assumption 2.7% 2.7% 2.7% 2.7%
The expected return on plan assets at 31 December is based upon the weighted average of the following assumptions of the returns
on the major classes of plan assets:
Main Scheme All Schemes
2005 2004 2005 2004
Equities 7.7% 8.1% 7.7% 8.1%
Index-linked bonds 4.1% 4.5% 4.1% 4.5%
Government fixed interest bonds 4.1% 4.5% 4.1% 4.5%
Corporate and other bonds 4.8% 5.4% 4.8% 5.4%
Property 5.9% 6.3% 5.9% 6.3%
Cash and other assets 4.2% 4.6% 3.7% 4.5%
The expected return on Main Scheme plan assets at 31 December 2004 has been adjusted to reflect the investment, in early January
2005, of payments made to the fund on 31 December and included as cash and other assets at that date.
Post-retirement mortality assumptions (Main Scheme) 2005 2004 2003
Longevity at age 60 for current pensioners (years)
Males 25.4 25.4 23.5
Females 28.2 28.2 25.3
Longevity at age 60 for future pensioners (years)
Males 26.2 26.2 24.8
Females 29.0 29.0 26.5
Notes on the accounts continued