HSBC 2003 Annual Report Download - page 253

251
At 31 December 2001 the assumptions used to calculate scheme liabilities for HSBC’ s main defined benefit
pension schemes under FRS 17 were:
Discount
rate
Inflation
assumption
Rate of increase
for pensions in
payment and
deferred
pension
Rate of pay
Increase
%%%%
United Kingdom ................................................... 5.9 2.5 2.5 3.75
Hong Kong ........................................................... 6.5 n/a n/a 6.0
United States ........................................................ 7.25 2.75 n/a 4.0
Jersey .................................................................... 5.9 2.5 2.5 4.25
Brazil .................................................................... 10.25 5.0 5.0 6.05
France ................................................................... 5.5 2.0 2.0 3.5
Other .................................................................... 4.5-6.25 1.5-2.0 1.5-2.0 2.5-3.5
The assets in the defined benefit schemes and the expected rates of returns are:
At 31 December 2003
HSBC Bank (UK) Pension Scheme Other schemes
Expected rate
of return Value
Expected rate
of return Value
%US$m %US$m
Equities ................................................................ 8.5 7,232 9.3 2,740
Bonds ................................................................... 5.0 3,544 5.6 2,124
Property ................................................................ 7.0 1,167 7.0 26
Other .................................................................... 4.0 917 3.1 372
Total market value of assets ................................. 12,860 5,262
Present value of scheme liabilities ........................ (16,232
)
(5,514
)
Deficit in the schemes .......................................... (3,372
)
(252
)
1
Related deferred tax asset ..................................... 1,012 45
Net pension liability ............................................. (2,360
)
(207
)
Net amounts provided in the balance sheet for
unfunded schemes............................................. 388
Net pension asset................................................... 181
1Of the deficit in other schemes, US$679 million relates to schemes in deficit and US$427 million relates to schemes in
surplus. Of the schemes in deficit, US$514 million relates to unfunded pension schemes in respect of which a provision, net
of deferred tax, of US$388 million has been made. In relation to main schemes, there is a surplus of US$156 million in the
HSBC Group Hong Kong Local Staff Retirement Benefit Scheme and a surplus of US$112 million in the HSBC Bank USA
Pension Plan.
The net pension liability will have a consequent effect on reserves when FRS17 is fully implemented.
The defined benefit section of the HSBC Bank (UK) Pension Scheme and the HSBC Group Hong Kong
Local Staff Retirement Benefit Scheme are closed to new entrants. For these schemes the current service
cost will increase under the projected unit credit method as the members of the scheme approach retirement.