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Vodafone Group Plc Annual Report & Accounts and Form 20-F Notes to the Consolidated Financial Statements120
Notes to the Consolidated Financial Statements continued
34. Pensions
As at 31 March 2002, the Group operated a number of pension plans for the benefit of its employees throughout the world, which vary with conditions
and practices in the countries concerned. All the Group’s pension plans are provided either through defined benefit or defined contribution arrangements.
Defined benefit schemes provide pensions based on the employees’ length of pensionable service and their final pensionable salary or other criteria.
Defined contribution schemes offer employees individual funds that are converted into pension benefits at the time of retirement.
Further details on the three principal defined benefit pension schemes, in the United Kingdom, Germany and Japan are shown below. In addition to principal
schemes, the Group operates defined benefit schemes in Ireland, Sweden and Italy.
Defined contribution style pension schemes are provided in Australia, Egypt, Germany, Greece, Malta, Netherlands, New Zealand, Portugal and Spain.
The figures below have been prepared in accordance with the requirements of the current UK Statement of Standard Accounting Practice (“SSAP”) 24,
“Accounting for pension costs”.
During the year ended 31 March 2002, the total amount charged to the profit and loss account in respect of all the Group’s pensions plans was £64m
(2001: £47m, 2000: £42m), as analysed below:
Year ended 31 March
2002 2001 2000
£m £m £m
Defined benefit schemes:
United Kingdom 24 23 17
Germany 14 14 –
Japan 6––
Other Countries 4––
Net pension charge: Defined benefit schemes 48 37 17
Net pension charge: Defined contribution schemes 16 10 25
Total amount charged to the profit and loss account 64 47 42
Defined benefit schemes
Below is a summary of the principal assumptions used in both the most recent valuations and the pension cost analysed below:
UK Germany Japan
Rate of inflation 2.5% 2.0% 0%
Rate of increase in salaries 4.5% 4.0% See below*
Rate of increase in pensions in payment 2.5% 2.0% N/a
Rate of increase in deferred pensions 2.5% 0% N/a
Rate used to discount liabilities – pre-retirement 7.0% 6.5% 3.0%
Rate used to discount liabilities – post-retirement 6.0% 6.5% 3.0%
* Rate of increase in salaries in Japan is calculated in line with company specific experience.
The components of the total pension costs of the three principal defined benefit schemes were as follows:
UK Germany Japan (2)
Year ended 31 March Year ended 31 March Year ended 31 March
2002 2001 2002 2001 2002 2001
£m £m £m £m £m £m
Regular cost 20 20 645–
Interest cost (2) (1) 810 1–
Variation in regular cost (1) 64––––
Total 24 23 14 14 6–
Notes:
(1) The variation in regular cost was calculated by amortising the shortfall at 31 March 2001 over the future working lives of members (average of ten
years in respect of the UK scheme) on a percentage of pensionable salary basis.
(2) The above numbers represent the pension costs for the part of the year since the acquisition of the Japanese businesses.