RBS 2005 Annual Report Download - page 231

section
03
Financial
statements
229
Notes on the accounts
Annual Report and Accounts 2005
2005 2004
Prepaid pension cost: £m £m
Funded status (3,359) (2,594)
Unrecognised net actuarial loss 6,383 5,990
Unrecognised prior service cost 11 12
Unrecognised transition amount —(6)
Prepaid pension cost at year end 3,035 3,402
2005 2004
Components of net periodic pension cost: £m £m
Service cost 457 420
Interest cost 860 768
Expected return on plan assets (932) (840)
Amortisation of prior service cost 4 1
Amortisation of loss 364 263
Amortisation of net transition asset (6) (8)
Net periodic pension cost 747 604
Assumptions
2005 2004
Weighted average assumptions used at 31 December: % per annum % per annum
Discount rate for liabilities 4.80 5.40
Salary increases 3.95 3.95
Pension increases 2.70 2.70
Long-term rate of return on assets 6.47 6.95
2005 2004
Weighted average allocations of market value of plan assets at 31 December: %%
Equity shares 61 57
Debt securities 35 31
Other 4 12
Total 100 100
At 31 December 2005, the fund’s accumulated benefit
obligation was underfunded by £1,433 million (2004 – £561
million). This resulted in a reduction in the accumulated other
comprehensive income component of US GAAP shareholders’
equity of £4,457 million (2004 – £3,951 million), comprising
the excess of the accumulated benefit obligation over the
market value of assets of £1,433 million (2004 – £561 million),
prepaid pension cost of £3,035 million (2004 – £3,402 million)
less unrecognised prior service cost £11 million (2004 – £12
million). This was reduced by deferred tax of £1,337 million
(2004 – £1,185 million). At 31 December 2003, the fund had
a surplus of assets over its accumulated benefit obligation and
no minimum liability was recognised.
Cash flows
The following pension payments under the main scheme,
which reflect expected future service, as appropriate, are
expected to be paid:
£m
2006 513
2007 522
2008 535
2009 549
2010 565
After 2011 3,156
The Group expects to contribute £392 million to its main UK
pension plan in 2006.
47 Post balance sheet events
There have been no significant events between the year end and the date of approval of these accounts which would require a change
to or disclosure in the accounts.