Tesco 2010 Annual Report Download - page 116

Download and view the complete annual report

Please find page 116 of the 2010 Tesco annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 136

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136

Notes to the Group financial statements continued
Note 28 Post-employment benefits continued
UK mortality assumptions
The Company conducts analysis of mortality trends under the Tesco PLC Pension Scheme in the UK as part of the triennial actuarial valuation of the
Scheme. At the latest triennial actuarial valuation as at 31 March 2008, the following assumptions were adopted for funding purposes:
Base tables:
PMA92C00 for male members with cohort improvements to 2000 and members taken to be one year younger than actual age.
PFA92C00 for female members with cohort improvements to 2000 and members taken to be half a year older than actual age.
These assumptions were used for the calculation of the pension liability as at 27 February 2010 for the main UK scheme.
As at 27 February 2010, the mortality assumptions have been strengthened. The base tables have been updated in line with medium cohort projections
with a minimum improvement of 1% per annum from 31 March 2008 to 27 February 2010. In addition, the allowance for future mortality improvements
has been changed to incorporate medium cohort projections with a minimum improvement of 1% per annum.
The following table illustrates the expectation of life of an average member retiring at age 65 at the balance sheet date and a member reaching age 65
at the same date +25 years:
2010 2009
in years in years
Retiring at Reporting date at age 65: Male 21.6 21.5
Female 23.4 23.3
Retiring at Reporting date +25 years at age 65: Male 24.0 23.9
Female 25.9 25.8
Rates of return on scheme assets
The assets in the defined benefit pension schemes and the expected nominal rates of return were:
2010 2009
Long-term Market Long-term Market
rate of return value rate of return value
% £m % £m
Equities 8.7 2,521 8.9 1,482
Bonds 5.1 1,233 5.5 1,080
Property 7.0 343 7.3 342
Other (alternative assets) 8.7 484 8.9 383
Cash 4.1 115 3.7 133
Total market value of assets 4,696 3,420
The expected rate of return on assets is a weighted average based on the actual plan assets held and the respective returns expected on the separate
asset classes. The expected rate of return on equities and cash have both been set having regard to expected returns over the medium term, as
calculated by the Company’s independent actuary. The expected rate of return on bonds was measured directly from actual yields for gilts and corporate
bond stocks. The above rate takes into account the actual mix of UK gilts, UK corporate bonds and overseas bonds held at the balance sheet date.
Movement in pension deficit during the year
Changes in the fair value of defined benefit pension plan assets are as follows:
2010 2009
£m £m
Opening fair value of plan assets 3,420 4,089
Expected return 265 338
Actuarial gains/(losses) 733 (1,270)
Contributions by employer 415 376
Actual member contributions 9 8
Foreign currency translation (2) 11
Benefits paid (144) (132)
Closing fair value of plan assets 4,696 3,420
114 Tesco PLC Annual Report and Financial Statements 2010