Continued

20 Pensions and other post-retirement benefits
The Group has a number of contributory and non-contributory pension schemes providing retirement benefits for the majority of employees and all executive directors. The main schemes in the UK and US are of the defined benefit type, the benefits being based on years of service and either the employee's final remuneration or the employee's average remuneration during a period of years before retirement. The assets of these schemes are held in separate trustee administered funds or are unfunded but with provisions maintained on the Group balance sheet. In addition, the Group operates an unfunded post-retirement medical benefit (PRMB) scheme in the US. The entitlement to these benefits is usually based on the employee remaining in service until retirement age and completion of a minimum service period. The total cost of post-retirement health care and pensions to the Group was £8.5 million (2002: £5.3 million), of which £4.6 million (2002: £2.7 million) related to overseas schemes.

A full actuarial valuation was carried out at 30 September 2003 for the UK scheme and at 31 December 2002 for the US schemes. The actuaries updated these valuations to 31 December 2003. The major assumptions used by the actuaries were:

	2003 UK		2003 US		2002 UK		2002 US		2001 UK		2001 US
	schemes		schemes		schemes		schemes		schemes		schemes
Rate of increase in salaries	4.25	%	3.70	%	4.30	%	4.70	%	4.50	%	4.70
Rate of increase in pensions in payment	2.75	%	-		2.30	%	-		2.50	%	-
Discount rate	5.60	%	6.00	%	5.75	%	6.50	%	6.00	%	6.75	%
Inflation assumption	2.75	%	3.50	%	2.30	%	3.50	%	2.50	%	3.50	%

The main assumptions for the PRMB scheme are a discount rate of 6.0% (2002: 6.5%) per annum and a health care cost trend of 10.00% and 11.00% per annum for claims pre age 65 and post age 65 respectively reducing to 4.5% per annum by 2009 (2002: 4.50%).

Actuarial valuations of pension schemes in other jurisdictions have not been updated for FRS17 purposes because of the costs involved and the considerably smaller scheme sizes and numbers of employees involved.

The assets in the defined benefit pension schemes and the expected rates of return were:

	Expected long term rate of return at year end
	2003 UK		2003 US		2002 UK		2002 US		2001 UK		2001 US
	schemes		schemes		schemes		schemes		schemes		schemes
Equities	8.0	%	8.5	%	8.0	%	8.5	%	8.0	%	8.5	%
Bonds	4.6	%	6.0	%	4.1	%	6.0	%	4.8	%	6.0	%
Property	-		-		-		-		6.4	%	-
Cash & insured annuities	3.8	%	-		4.0	%	-		5.0	%	-
	Value at year end
	2003 UK		2003 US		2002 UK		2002 US		2001 UK		2001 US
	schemes		schemes		schemes		schemes		schemes		schemes
Equities	164.6		30.3		127.5		25.2		239.2		27.5
Bonds	135.0		11.8		147.8		11.1		128.9		17.5
Property	-		-		-		-		8.9		-
Cash & insured annuities	16.2		0.5		24.7		1.3		30.5		1.8
	315.8		42.6		300.0		37.6		407.5		46.8

The net pension liability was as follows:

	2003		2003		2003
	UK pension schemes		US pension schemes		US PRMB scheme		2003 Total
	£million		£million		£million		£million
Total market value of assets	315.8		42.6		-		358.4
Present value of scheme liabilities	(365.6	)	(57.6	)	(12.7	)	(435.9	)
Deficit in the schemes	(49.8	)	(15.0	)	(12.7	)	(77.5	)
Related deferred tax asset	14.9		5.9		5.0		25.8
Net pension liability	(34.9	)	(9.1	)	(7.7	)	(51.7	)
	2002		2002		2002
	UK pension schemes		US pension schemes		US PRMB scheme		2002 Total
	£million		£million		£million		£million
Total market value of assets	300.0		37.6		-		337.6
Obligations in respect of business disposals	(7.9	)	-		-		(7.9	)
Present value of scheme liabilities	(347.8	)	(60.7	)	(14.3	)	(422.8	)
Deficit in the schemes	(55.7	)	(23.1	)	(14.3	)	(93.1	)
Related deferred tax asset	15.9		9.0		5.6		30.5
Net pension liability	(39.8	)	(14.1	)	(8.7	)	(62.6	)

The net pension liability in respect of pension schemes in other jurisdictions at 31 December 2003 was £1.1 million (2002: £1.0 million).

The following amounts have been recognised in the performance statements in the year to 31 December 2003:

	2003		2003		2003
	UK pension		US pension		US PRMB		2003
	schemes		schemes		scheme		Total
	£million		£million		£million		£million
Consolidated profit & loss account
Operating profit
Current service cost	(2.9	)	(2.1	)	(0.2	)	(5.2	)
Past service credit	1.3		-		-		1.3
Total operating charge	(1.6	)	(2.1	)	(0.2	)	(3.9	)
Net interest payable receivable/(payable)
Expected return on pension scheme assets	17.2		2.9		-		20.1
Interest on pension scheme liabilities	(19.5	)	(3.8	)	(1.0	)	(24.3	)
Net finance charge	(2.3	)	(0.9	)	(1.0	)	(4.2	)
Net profit & loss account charge	(3.9	)	(3.0	)	(1.2	)	(8.1	)
Statement of total recognised gains and losses
Actual return less expected return on pension scheme assets	19.8		5.8		-		25.6
Experience gains and losses arising on scheme liabilities	3.3		1.3		1.3		5.9
Changes in assumptions underlying the present value of scheme liabilities	(21.8	)	(2.6	)	(1.1	)	(25.5	)
Actuarial gain recognised	1.3		4.5		0.2		6.0
Movement in deficit during the year
Deficit in schemes at beginning of the year	(55.7	)	(23.1	)	(14.3	)	(93.1	)
Current service cost (incl. member contributions)	(3.3	)	(2.1	)	(0.2	)	(5.6	)
Past service credit	1.3		-		-		1.3
Contributions (incl. member contributions)	8.9		4.7		1.0		14.6
Net interest payable	(2.3	)	(0.9	)	(1.0	)	(4.2	)
Actuarial gain	1.3		4.5		0.2		6.0
Currency translation differences	-		1.9		1.6		3.5
Deficit in schemes at end of the year	(49.8	)	(15.0	)	(12.7	)	(77.5	)

In addition to the current service cost above, £0.4 million (2002: £0.6 million) was charged to the profit and loss account in respect of defined contribution schemes.

	2002 UK pension		2002 US pension		2002 US PRMB		2002
	schemes		schemes		scheme		Total
	£million		£million		£million		£million
Consolidated profit & loss account
Operating profit
Current service cost	(2.7	)	(1.9	)	(0.2	)	(4.8	)
Net interest payable receivable/(payable)
Expected return on pension scheme assets	21.8		3.3		-		25.1
Interest on pension scheme liabilities	(20.2	)	(3.9	)	(0.9	)	(25.0	)
Net return	1.6		(0.6	)	(0.9	)	0.1
Net profit & loss account charge	(1.1	)	(2.5	)	(1.1	)	(4.7	)
Statement of total recognised gains and losses
Actual return less expected return on pension scheme assets	(57.0	)	(8.4	)	-		(65.4	)
Experience gains and losses arising on scheme liabilities	13.0		0.3		(0.3	)	13.0
Changes in assumptions underlying the present value of scheme liabilities	(2.3	)	(2.0	)	(2.7	)	(7.0	)
Actuarial loss recognised	(46.3	)	(10.1	)	(3.0	)	(59.4	)
Movement in deficit during the year
Deficit in schemes at beginning of the year	(11.2	)	(15.7	)	(11.6	)	(38.5	)
Current service cost (incl. member contributions)	(3.5	)	(1.9	)	(0.2	)	(5.6	)
Contributions (incl. member contributions)	3.7		3.1		1.2		8.0
Net interest receivable/(payable)	1.6		(0.6	)	(0.9	)	0.1
Actuarial loss	(46.3	)	(10.1	)	(3.0	)	(59.4	)
On acquisition of business	-		-		(1.1	)	(1.1	)
Currency translation differences	-		2.1		1.3		3.4
Deficit in schemes at end of the year	(55.7	)	(23.1	)	(14.3	)	(93.1	)

Employer contributions in 2003 were £8.4 million (2002: £3.1 million) to UK schemes; £5.7 million (2002: £4.2 million) to US schemes and £0.3 million (2002: £0.4 million) in respect of other schemes. Contributions in 2004 at current exchange rates are expected to be £8.4 million.

Details of experience gains and losses for the year to 31 December	UK		US		UK		US		UK		US
	pension schemes		pension schemes		pension schemes		pension schemes		pension schemes		pension schemes
	2003 £million		2003 £million		2002 £million		2002 £million		2001 £million		2001 £million
Difference between the expected and actual return on scheme assets:
Amount	19.8		5.8		(57.0	)	(8.4	)	(55.3	)	(7.1	)
Percentage of net scheme assets	6.3	%	13.6	%	(20.7	%)	(20.9%	)	(16.5	%)	(15.2	%)
Experience gains and losses on scheme liabilities:
Amount	3.3		2.6		13.0		-		2.2		(0.3	)
Percentage of the present value of the scheme liabilities	0.9	%	3.7	%	3.7	%	-		0.6	%	(0.5%	)
Total amount recognised in statement of total recognised gains and losses: