Our Accounts 115
Notes to the financial statements continued
31 December 2012
39. Pension benefit asset/(obligation) (continued)
iii) Ockham Pension Scheme (continued)
d) Principal assumptions used 2012 2011
Discount rate 4.1% 4.7%
Rate of salary increase 3.00% 3.65%
Expected return on plan assets n/a 3.7%
Pension increases
– linked to inflation 3.0% 2.9%
– fixed rate 5.0% 5.0%
Price inflation
– RPI 3.0% 2.9%
– CPI 2.0% 2.0%
Mortality rate assumptions are based on the same mortality tables as disclosed within the LV Scheme.
e) Sensitivity analysis: Impact on defined benefit obligation of making changes to key assumptions
Change in assumption Impact on defined benefit obligation
Discount rate Increase by 0.25% Decrease by £4.8m (4.1%)
Inflation rate Increase by 0.25% Increase by £3.3m (2.8%)
Cash commutation Nil Increase by £3.7m (3.2%)
Mortality improvements long term rate Increase by 0.25% Increase by £1.6m (1.4%)
f) Plan asset information
Plan assets are comprised as follows:
Statements and Reviews
Allocation Allocation
percentage percentage
2012 2011
Equities 41.2% 8.3%
Debt securities 29.0% 63.9%
Derivative swaps 14.9% 16.8%
Cash 3.6% 4.1%
Property 0.8% 0.7%
Other 10.5% 6.2%
Our Businesses
Total 100.0% 100.0%
Expected contributions to the scheme for the year ending 31 December 2013 are £7m.
g) Historical disclosure information 2012 2011 2010 2009
£m £m £m £m
Asset experience
Asset gains during year (2.1) (8.7) (6.5) (6.2)
Risk Management
Liability experience
Obligation loss during year 2.0 - 1.1 3.7
Funded status
Defined benefit obligation (117.5) (107.0) (97.6) (88.6)
Fair value of assets 115.0 105.8 88.8 75.2
Net obligation (2.5) (1.2) (8.8) (13.4)
Corporate Governance
Our Accounts