TRUSTEES' REPORT AND ACCOUNTS 2014 33
20 PENSIONS (CONTINUED)
MAIN FINANCIAL ASSUMPTIONS
2014
(% p.a.)
2013
(% p.a.)
Inflation 3.0 3.4
Rate of general long-term increase in salaries 3.0 4.4
Rate of increase to pensions in payment:
LPI 5% 2.9 3.3
LPI 2.5% 2.0 2.2
Discount rate for scheme liabilities 3.6 4.5
2014
£'000
2013
£'000
Equities 70,710 66,477
Government bonds 9,937 14,242
Corporate bonds 21,571 18,166
Property 14,873 12,038
LDI fund 43,383 30,824
Total return fund 41,937 39,078
Cash/money market 2,562 3,083
Total market value of assets 204,973 183,908
Long term expected rate of return
From 1 January 2015 the new accounting standard FRS 102 comes into effect. Under this standard it is no longer possible to take advance
credit for anticipated investment outperformance above that expected from AA rated corporate bonds. Therefore the expected return
used, at 31 December 2014, is 3.6% which is equal to the discount rate. At 31 December 2013 the expected rates of return for each asset
class ranged from 0.5% to 8.2%. The weighted average expected rate of return was 6.5%.
Mortality assumptions
90% of the SAPS S1PxA tables with 2010 CMI improvements subject to a floor of 1% per annum have been used for this disclosure.
This table results in the following life expectations from age 65.
2014 2013
MALE FEMALE MALE FEMALE
Retired member 23.3 25.4 23.2 25.2
Member not yet retired 24.7 26.9 24.6 26.8
Reconciliation to balance sheet VALUE AT
31 DECEMBER 2014
£'000
VALUE AT
31 DECEMBER 2013
£'000
Total market value of assets 204,973 183,908
Present value of scheme liabilities (263,522) (239,087)
Net pension liability (58,549) (55,179)
NOTES TO THE ACCOUNTS