A full actuarial valuation of the SFM Plan was carried out as at 31 December 2017 by a qualified independent actuary.

Transcription

1 10. Pension schemes 10.1 Defined contribution plans The operates the Savills UK Personal Pension Plan, a defined contribution scheme, a number of defined contribution individual pension plans and a Mandatory Provident Fund Scheme in Hong Kong, to which it contributes. The total pension charges in respect of these plans were 26.9m (: 23.0m). The amount outstanding as at 31 December in relation to defined contribution schemes is 1.9m (: 1.5m) Defined benefit plan The operates two defined benefit plans. The Pension Plan of Savills (the ) is a UK-based plan which provided final salary pension benefits to some employees, but was closed with regard to future service-based benefit accrual with effect from 31 March From 1 April 2010, pension benefits for former employees of the are provided through the s defined contribution Personal Pension Plan. The is administered by a separate Trust that is legally separated from the. The board of the pension fund is composed of six trustees. The board of the pension fund is required by law and by its Article of Association to act in the interest of the fund and of all relevant stakeholders in the scheme. The board of the pension fund is responsible for the investment policy with regard to the assets of the fund. The contributions are determined by an independent qualified actuary on the basis of triennial valuations. A full actuarial valuation of the was carried out as at 31 March and has been updated to 31 December by a qualified independent actuary. The Savills Fund Management GMBH Plan (the ) is a Germany-based plan which provides final salary benefits to 17 active employees and 97 former employees. The plan is closed to future service-based benefit accrual. The is administered by an external Trust that is legally separated from the. The Trust Agreement requires the trustee to maintain the in the interest of the beneficiaries of the plan and to fulfil their pension entitlements in the event of insolvency to the extent of the held. The Investment Committee of the fund, advised by expert investment managers, is responsible for the investment policy with regards to the assets of the fund. The contributions are determined based on the annual valuations of an independent qualified actuary. A full actuarial valuation of the was carried out as at 31 December by a qualified independent actuary. The table below outlines the s and s defined benefit pension amounts in relation to the : Liability in the statement of financial position Net interest cost included in finance costs Actuarial (gain)/loss included in other comprehensive income (13.3) 33.6 (0.7) 1.9 The amounts recognised in the statement of financial position in relation to the are as follows: of funded obligations (278.7) (257.6) (15.4) (14.2) Liability recognised in the statement of financial position Report and Accounts 111

2 Notes to the financial statements continued Year ended 31 December 10. Pension schemes continued 10.2 Defined benefit plan continued The movement in the defined benefit obligation for the over the year is as follows: At 1 January (257.6) (14.2) 2.3 Interest expense/(income) 7.8 (6.8) (0.4) Return on, excluding amounts included in interest income (23.3) (23.3) (1.3) (1.3) Loss from change in financial assumptions Gain from change in demographic assumptions Experience losses (0.2) (0.2) Employer contributions (9.0) (9.0) (0.5) (0.5) Benefit payments (18.0) 18.0 (1.0) 1.0 At 31 December (278.7) (15.4) 1.1 At 1 January (209.9) (11.6) 0.9 Interest expense/(income) 8.3 (7.9) (0.4) Return on, excluding amounts included in interest income (35.0) (35.0) (1.9) (1.9) Loss from change in financial assumptions Gain from change in demographic assumptions (0.8) (0.8) Experience losses Employer contributions (9.0) (9.0) (0.5) (0.5) Benefit payments (4.2) 4.2 (0.2) 0.2 At 31 December (257.6) (14.2) 2.3 The table below outlines the s defined benefit pension amounts in relation to the : (Asset)/liability in the statement of financial position (1.3) 0.4 Current service cost included in employee benefits expense Actuarial (gain)/loss included in other comprehensive income (0.8) 1.6 Section 5.2 of the Trust Deed provides the Trustor (Savills Fund Management GmbH, Savills Fund Management Holding AG, and Savills Investment Management (Germany) GmbH respectively) with an unconditional right to a refund of surplus assets assuming the full settlement of plan liabilities in the event of a plan wind-up. Furthermore, in the ordinary course of business neither Trustor nor Trustee have any rights to unilaterally wind up, or otherwise augment the benefits due to members of the scheme. Based on these rights, any net surplus in the scheme is recognised in full. The amounts recognised in the statement of financial position in relation to the are as follows: of funded obligations (15.2) (14.0) (Asset)/liability recognised in the statement of financial position (1.3) Report and Accounts

3 The movement in the defined benefit liability/(asset) for the over the year is as follows: Fair value of At 1 January 14.4 (14.0) 0.4 Current service cost Interest expense/(income) 0.3 (0.3) Return on, excluding amounts included in interest income (0.2) (0.2) Gain from change in financial assumptions (0.5) (0.5) Experience gains (0.1) (0.1) Transfers (0.3) 0.3 Employer contributions (0.9) (0.9) Benefit payments (0.4) 0.4 Exchange movement 0.4 (0.5) (0.1) At 31 December 13.9 (15.2) (1.3) Fair value of At 1 January 10.9 (12.2) (1.3) Current service cost Interest expense/(income) 0.3 (0.3) Loss on, excluding amounts included in interest income Loss from change in financial assumptions Experience gains (0.2) (0.2) Benefit payments (0.3) 0.3 Exchange movement 1.9 (2.0) (0.1) At 31 December 14.4 (14.0) 0.4 The significant actuarial assumptions were as follows: As at 31 December Expected rate of salary increases 2.50% 2.50% 3.25% 3.25% Projection of social security contribution ceiling 2.25% 2.25% Rate of increase to pensions in payment Pension promise before 1 January % 2.25% Pension promise after 1 January % 1.75% accrued before 6 April % 3.00% accrued after 5 April % 3.40% accrued after 5 April % 2.30% Rate of increase to pensions in deferment accrued before 6 April % 5.00% accrued after 5 April % 2.40% accrued after 5 April % 2.40% Discount rate 2.06% 1.84% 2.50% 2.70% Inflation assumption 1.75% 1.75% 3.40% 3.50% Report and Accounts 113

4 Notes to the financial statements continued Year ended 31 December 10. Pension schemes continued 10.2 Defined benefit plan continued Assumptions regarding future mortality are set based on actuarial advice in accordance with published statistics and experience. These assumptions translate into an average life expectancy in years for a pensioner retiring at age 60: Retiring at the end of the reporting year Male Female Retiring 20 years after the end of the reporting year Male Female The sensitivity of the defined benefit obligation to changes in the principal assumptions is: Impact on present value of scheme obligations Impact on present value of scheme obligations 0.1% increase in discount rates (0.2) (7.1) 0.1% increase in inflation rate % increase in salary increase rate year increase in life expectancy The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the statement of financial position. Plan assets are comprised as follows: % % % % Equity instruments % % Investment funds % % % % Liability-driven investment (LDI) % % Bonds % % Cash and cash equivalents 0.8 1% 1.0 1% % % % % No Plan assets are the s own financial instruments or property occupied or used by the. The fair values of the above equity and debt instruments are determined based on quoted market prices in active markets. Although the does not invest directly in the s financial instruments, it does invest in passive equity funds, so will have some exposure to FTSE All Share, hence indirectly to the Savills share price. 114 Report and Accounts

5 Through the defined benefit plans, the is exposed to a number of risks, the most significant of which are detailed below: (a) Asset volatility The plan liabilities are calculated using a discount rate set with reference to corporate bond yields; if underperform this yield, this will create a deficit. The Plan holds a significant proportion of equities and investment funds, which are expected to outperform corporate bonds in the long-term while providing volatility and risk in the short term. (b) Changes in bond yields A decrease in corporate bond yields will increase the Plan s liabilities, although this will be partially offset by an increase in the value of the Plan s bond holdings. (c) Inflation risk Higher inflation will lead to higher liabilities. The majority of the Plan s assets are either unaffected by or are loosely correlated with inflation, meaning that an increase in inflation will also increase the deficit. (d) Life expectancy The majority of the Plan s obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an increase in the Plan s liabilities. Expected contributions to post-employment benefit plans for the year ending 31 December 2018 are 9.0m. The expects to contribute 0.5m. The weighted average duration of the defined benefit obligation is 22 years for the and 18 years for the. Expected maturity analysis of the undiscounted pension benefits: At 31 December Less than a year Between 1 2 years Between 2 5 years Over 5 years Pension benefit payments Finance income and costs Bank interest receivable Fair value gain Finance income Bank interest payable (2.1) (1.3) Unwinding of discounts on liabilities (0.7) (0.6) Net interest on defined benefit pension obligation (1.0) (0.4) Fair value loss (0.3) (0.1) Finance costs (4.1) (2.4) Net finance cost (1.3) (0.8) Report and Accounts 115