Full Annual Report - Inchcape

Financial statements
Notes to the accounts continued
5 Pensions and other post-retirements benefits
The Group operates a number of pension and post-retirement benefit schemes for its employees in a number of its subsidiaries.
The principal schemes are held in the UK and are final salary defined benefit pension schemes. Most of the schemes have assets held
in trust in separately administered funds although there are some minor unfunded arrangements relating to post-retirement health and
medical plans in respect of past employees. There are no material defined contribution schemes in the UK.
The majority of the overseas defined benefit schemes are final salary schemes which provide a lump sum on retirement, some of which
have assets held in trust in separately administered funds and others which are unfunded. The overseas defined contribution schemes
are principally linked to local statutory arrangements.
a. UK schemes
The UK has four main defined benefit schemes, namely the Inchcape Group (UK) Pension Scheme, the Inchcape Motors Pension
Scheme, the Inchcape Overseas Pension Scheme and the TKM Group Pension Scheme. These schemes are considered below:
Open schemes
Inchcape Group (UK) Pension Scheme
The latest triennial actuarial valuation for this scheme was carried out as at 31 March 2009 on a market related basis and determined in
accordance with the advice of independent professionally qualified actuaries based on the projected unit method. The majority of the
scheme’s liabilities are for pensioners and deferred pensioners, and the investment strategy is to hold a broadly balanced portfolio of
equities and gilts.
Inchcape Motors Pension Scheme
The latest triennial actuarial valuation for this scheme was carried out as at 5 April 2009 on a market related basis and determined in
accordance with the advice of independent professionally qualified actuaries based on the projected unit method. Whilst a majority
of the scheme’s members are pensioners and deferred pensioners, a sizeable portion of the membership is still accruing benefits and
the investment strategy reflects this with the majority of the assets invested in equities and bonds.
Inchcape Overseas Pension Scheme
This scheme is managed from Guernsey and is therefore reported in the United Kingdom segment in this note. The latest triennial
actuarial valuation for this scheme was carried out as at 31 March 2009 and determined in accordance with the advice of independent
professionally qualified actuaries based on the projected unit method. A significant majority of the scheme’s members are pensioners
and deferred pensioners and therefore the majority of the assets are invested in bonds.
Closed scheme
TKM Group Pension Scheme
The latest triennial actuarial valuation for this closed scheme was carried out at 5 April 2007 on a market related basis and determined
in accordance with the advice of independent professionally qualified actuaries based on the projected unit method. The scheme has
a prudent investment strategy and the majority of the assets are invested in bonds, cash or gilts. Approximately half the members are
pensioners and half are deferred pensioners and as such no further pension accrual arises.
b. Overseas schemes
There are a number of smaller defined benefit schemes overseas, the most significant being the Inchcape Motors Limited Retirement
Scheme in Hong Kong. In general these schemes offer a lump sum on retirement with no further obligation to the employee. These
schemes are typically subject to triennial valuations.
c. Defined contribution plans
The total expense recognised in the consolidated income statement is £5.4m (2008 – £5.5m). There are no outstanding contributions
to defined contribution schemes at the year end (2008 – £nil).
d. Defined benefit plans
As the Group’s principal defined benefit schemes are in the UK, these have been reported separately to the overseas schemes. For the
purposes of reporting, actuarial updates have been obtained for the Group’s material schemes and these updates are reflected in the
amounts reported below.
The principal weighted average assumptions used by the actuaries were:
United Kingdom
Overseas
Rate of increase in salaries 5.2 4.7 4.5 4.6
Rate of increase in pensions 3.7 2.8 – –
Discount rate 5.7 6.2 3.1 1.9
Inflation 3.7 2.8 0.5 0.5
Expected return on plan assets 6.1 6.1 7.0 7.1
2009
%
2008
%
2009
%
2008
%
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Inchcape plc ¦ Annual Report and Accounts 2009