Notes to the consolidated financial statements - analysis of items in the primary statements
4. Pensions and other post-retirement benefits
Substantially all National Grid’s employees are members of either defined benefit or defined contribution pension plans.
In the UK the principal schemes are the National Grid UK Pension Scheme and the National Grid section of the Electricity Supply Pension Scheme. In the US we have a number of defined benefit and defined contribution pension plans and we also provide healthcare and life insurance benefits to eligible retired US employees. The fair value of plan assets and present value of defined benefit obligations as incorporated in these financial statements are updated annually. For further details regarding the nature and terms of each scheme/plan and the actuarial assumptions used to value the associated assets and pension or other post-retirement benefit obligations, refer to note 30.
The amounts recognised in the income statement with respect to pensions and other post-retirement benefits are as follows:
| Pensions | US other post-retirement benefits | ||||||
|---|---|---|---|---|---|---|---|
| 2010 £m | 2009 £m | 2008 £m | 2010 £m | 2009 £m | 2008 £m |
||
| Defined contribution scheme costs | 7 | 5 | 5 | – | – | – | |
| Defined benefit scheme costs | |||||||
| Current service cost* | 112 | 134 | 125 | 26 | 32 | 21 | |
| Past service cost | 19 | – | 5 | 6 | 7 | 5 | |
| Curtailment gain on redundancies | (7) | (4) | (16) | – | – | (4) | |
| Settlements on redundancies | – | – | 16 | – | – | – | |
| Special termination benefits on redundancies | 26 | 19 | 80 | – | – | 1 | |
| Curtailment cost – augmentations | 4 | 6 | 3 | – | – | – | |
| US healthcare reform cost | – | – | – | 9 | – | – | |
| Total in payroll costs – continuing | 161 | 160 | 218 | 41 | 39 | 23 | |
| Curtailment gain on sale of subsidiary undertaking | – | – | (12) | – | – | – | |
| Interest cost | 1,050 | 1,106 | 912 | 143 | 144 | 89 | |
| Expected return on plan assets | (931) | (1,163) | (1,014) | (50) | (73) | (50) | |
| Total in finance costs – continuing | 119 | (57) | (102) | 93 | 71 | 39 | |
| Current service cost | – | 2 | 2 | – | – | 1 | |
| Total in discontinued operations | – | 2 | 2 | – | – | 1 | |
- *
- As a result of flexible pension saving, a salary sacrifice arrangement introduced from December 2009, the current service cost has increased by £2m with a corresponding decrease in wages and salaries
The amounts recognised in the statement of comprehensive income are as follows:
| Pensions | US other post-retirement benefits | ||||||
|---|---|---|---|---|---|---|---|
| 2010 £m | 2009 £m | 2008 £m | 2010 £m | 2009 £m | 2008 £m |
||
| Actuarial net (loss)/gain during the year | (572) | (1,906) | 497 | (159) | (112) | (65) | |
| Exchange differences | 64 | (141) | 3 | 76 | (408) | 3 | |
| Total recognised for the year | (508) | (2,047) | 500 | (83) | (520) | (62) | |
| Cumulative actuarial (loss)/gain | (1,156) | (584) | 1,322 | (362) | (203) | (91) | |
The amounts recognised in the balance sheet with respect to pensions and other post-retirement benefits are as follows:
| Pensions | US other post-retirement benefits | ||||||
|---|---|---|---|---|---|---|---|
| 2010 £m | 2009 £m | 2008 £m | 2010 £m | 2009 £m | 2008 £m |
||
| Present value of funded obligations | (19,372) | (15,797) | (16,233) | (2,602) | (2,299) | (1,784) | |
| Fair value of plan assets | 18,186 | 14,797 | 16,536 | 950 | 722 | 737 | |
| (1,186) | (1,000) | 303 | (1,652) | (1,577) | (1,047) | ||
| Present value of unfunded obligations | (226) | (203) | (158) | – | – | – | |
| Other post-employment liabilities | – | – | – | (62) | (74) | (34) | |
| Unrecognised past service cost | – | – | – | 28 | 43 | 36 | |
| Net (liability)/asset in the balance sheet | (1,412) | (1,203) | 145 | (1,686) | (1,608) | (1,045) | |
| Liabilities | (1,412) | (1,472) | (701) | (1,686) | (1,608) | (1,045) | |
| Assets | – | 269 | 846 | – | – | – | |
| Net (liability)/asset | (1,412) | (1,203) | 145 | (1,686) | (1,608) | (1,045) | |
| Changes in the present value of the defined benefit | |||||||
| obligations (including unfunded obligations) | |||||||
| Opening defined benefit obligations | (16,000) | (16,391) | (16,127) | (2,299) | (1,784) | (1,126) | |
| Current service cost | (112) | (136) | (127) | (26) | (32) | (22) | |
| Interest cost | (1,050) | (1,106) | (912) | (143) | (144) | (89) | |
| Actuarial (losses)/gains | (3,563) | 1,719 | 1,335 | (360) | 215 | 8 | |
| Curtailment gain on redundancies | 7 | 4 | 16 | – | – | 4 | |
| Curtailment gain on sale of subsidiary undertaking | – | – | 12 | – | – | – | |
| Net transfers and disposals | (3) | 3 | 8 | – | – | – | |
| Special termination benefits | (26) | (19) | (80) | – | – | (1) | |
| Curtailment cost – augmentations | (4) | (6) | (3) | – | – | – | |
| Acquisition of subsidiary undertakings | – | – | (1,362) | – | – | (639) | |
| Plan amendments | (19) | – | (5) | 9 | – | – | |
| Plan amendments – US healthcare reform | – | – | – | (9) | – | – | |
| Medicare subsidy received | – | – | – | (10) | – | – | |
| Employee contributions | (10) | (13) | (15) | – | – | – | |
| Benefits paid | 1,008 | 1,003 | 875 | 132 | 116 | 78 | |
| Exchange adjustments | 174 | (1,058) | (6) | 104 | (670) | 3 | |
| Closing defined benefit obligations | (19,598) | (16,000) | (16,391) | (2,602) | (2,299) | (1,784) | |
| Changes in the fair value of plan assets | |||||||
| Opening fair value of plan assets | 14,797 | 16,536 | 15,468 | 722 | 737 | 531 | |
| Expected return on plan assets | 931 | 1,163 | 1,014 | 50 | 73 | 50 | |
| Actuarial gains/(losses) | 2,991 | (3,625) | (838) | 201 | (327) | (73) | |
| Assets distributed on settlements and transfers | – | – | (16) | – | – | – | |
| Transfers in/(out) | 3 | (3) | (8) | – | – | – | |
| Employer contributions | 572 | 799 | 465 | 137 | 93 | 46 | |
| Employee contributions | 10 | 13 | 15 | – | – | – | |
| Acquisition of subsidiary undertakings | – | – | 1,302 | – | – | 259 | |
| Benefits paid | (1,008) | (1,003) | (875) | (132) | (116) | (76) | |
| Exchange adjustments | (110) | 917 | 9 | (28) | 262 | – | |
| Closing fair value of plan assets | 18,186 | 14,797 | 16,536 | 950 | 722 | 737 | |
| Actual return on plan assets | 3,922 | (2,462) | 176 | 251 | (254) | (23) | |
| Expected contributions to defined benefit plans in the following year | 353 | 552 | 581 | 148 | 123 | 128 | |