Notes to the Group financial statements

for the year ended 31 March 2009

28. Retirement benefit assets/obligations

The Group operates both defined benefit and defined contribution plans in a number of countries and provides post-retirement healthcare benefits to certain former employees. A defined benefit plan is a pension plan that defines an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. A defined contribution plan is a pension plan that defines the amount of contributions that are paid by the Group into an independently administered fund.

Pension arrangements for the Group’s UK employees are operated principally through the Experian Pension Scheme which is a defined benefit plan and the Experian Money Purchase Pension Plan which is a defined contribution plan. These plans are governed by trust deeds which ensure that their finances and governance are independent from those of the Group. In North and Latin America, benefits are determined in accordance with local practice and regulations and funding is provided accordingly. There are no other material pension arrangements.

The Experian Pension Scheme has rules which specify the benefits to be paid and is financed accordingly with assets being held in independently administered funds. A full actuarial funding valuation of this plan is carried out every three years with interim reviews in the intervening years. The latest full valuation was carried out as at 31 March 2007 by independent, qualified actuaries, Watson Wyatt Limited, using the projected unit credit method. Under this method of valuation the current service cost will increase as members approach retirement due to the ageing active membership of the plan. There was a surplus at the date of the latest full actuarial valuation and accordingly no deficit repayment contributions are currently required. The next full valuation will be carried out as at 31 March 2010.

The disclosures required by IAS 19, which relate to the Group’s UK defined benefit pension arrangements only, are as follows:

Amounts recognised in the Group balance sheet

The Group’s retirement benefit assets and obligations are denominated primarily in sterling.

The Group has in place arrangements which secure unfunded pension benefit arrangements for certain directors and senior managers by granting charges to an independent trustee over independently managed portfolios of marketable securities owned by the Group. The amount of assets charged in this way is adjusted annually to keep the ratio of assets charged to the discounted value of the accrued benefits secured in this way as close as possible to the corresponding ratio in the Experian Pension Scheme. The total value of the assets charged in this way at 31 March 2009 was US$22m (2008: US$34m). Further details of the unfunded pension arrangements for directors appear in the report on directors’ remuneration.

Amounts recognised in the Group profit and loss account reserve

The curtailment gain of US$3m (2008: US$8m) arose principally from the restructuring of continuing businesses in the UK.

Movements during the year in the net retirement benefit (obligations)/assets
recognised in the Group balance sheet

The total defined benefit obligations of US$653m (2008: US$913m) include US$614m (2008: US$863m) in respect of the Group’s funded arrangements and US$39m (2008: US$50m) in respect of the Group’s unfunded arrangements.

Changes in the market value of the plans’ assets

The actual return on plans’ assets was a loss of US$167m (2008: loss of US$25m).

Contributions expected to be paid to the Experian defined benefit pension plans during the next financial year are US$11m by the Group and US$3m by employees.

Actuarial assumptions

The valuations used at 31 March 2009 have been based on the most recent actuarial valuations, updated by Watson Wyatt Limited to take account of the requirements of IAS 19. The principal actuarial assumptions used to calculate the present value of the defined benefit obligations were as follows:

The main financial assumption is the real discount rate, i.e. the excess of the discount rate over the rate of inflation. If this assumption increased/decreased by 0.1%, the defined benefit obligations would decrease/increase by approximately US$11m and the annual current service cost would remain unchanged. The discount rate is based on the market yields on high quality corporate bonds of appropriate currency and term to the defined benefit obligations. In the case of the Group’s principal plan, the Experian Pension Scheme, the obligations are primarily in sterling and have a maturity of some 18 years.

The IAS 19 valuation assumes that mortality will be in line with the PA92 series year of use tables with medium cohort mortality improvement projections and an age rating of +1 year. This includes an explicit allowance for anticipated future improvements in life expectancy (medium cohort projections).

The average expectation of life on retirement at age 65 in normal health is assumed to be:

An increase in assumed life expectancy of 0.1 years would increase the defined benefit obligations at 31 March 2009 by approximately US$3m.

The assumptions in respect of discount rate, salary increases and mortality all have a significant effect on the IAS 19 accounting valuation. Changes to these assumptions in the light of prevailing conditions may have a significant impact on future valuations.

The IAS 19 valuation, in respect of post-retirement healthcare benefits, additionally assumes a rate of increase for medical costs. If this assumption increased/decreased by 1.0% per annum the obligation would increase/decrease by US$1m and the current service cost would remain unchanged.

Assets of the Group’s defined benefit plans and their expected
long-term rates of return

The overall return has been determined by considering the mix of returns anticipated on the assets held in accordance with the current investment policy. Expected yields on fixed interest securities are based on gross redemption yields as at the balance sheet date. Expected returns on equities and other assets reflect the long-term real rates of return experienced in the respective markets.

History of experience gains and losses

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