Investor Presentaiton
Defined Benefit Pension Schemes
Group IAS19 DB Pension Deficit
Bank of Ireland Group
3.65%
2.20%
2.30%
2.20%
1.60%
€1.19bn
€0.99bn
€0.84bn
€0.74bn
Dec 13
Dec 14
Dec 15
€0.45bn
€0.15bn
Jun 16
Dec 16
Dec 16
EUR Discount Rate
IAS19 DB Pension Deficit
Pro-forma Group IAS19 DB pension deficit following c.€0.3bn
expected cash or other suitable assets contribution'
BSPF Surplus/ Deficit under Relevant Bases Dec 16
Minimum funding
standard²
Actuarial /
on-going basis
(€388m)
(€138m)
IAS19
(€138m)
€213m
€463m
€112m
Estimated surplus/ (deficit) at Dec 16
Pro-forma position following €250m expected cash or other suitable assets contribution to BSPF
IAS19 requires that the rate used to discount DB pension liabilities be
selected by reference to market yields on high quality corporate bonds
with a corresponding duration. However, only a small number of such
AA Euro corporate bonds exist at the c.21 year duration and those
bonds tend to be relatively illiquid
Group IAS19 DB pension deficit of €0.45bn at Dec 16 (€0.74bn at Dec 15)
Primary drivers of the movement in deficit were;
Positive asset returns. The BSPF3 assets returned +7.7%
c.€100m of additional deficit reducing contributions
Long term ROI inflation rate expectation decreasing from 1.6% to
1.55%, offset by
Euro and UK AA discount rates decreased from 2.3% to 2.2% and
3.8% to 2.55% respectively
Long term UK RPI inflation rate expectation increasing from 3.3%
to 3.4%
The Pension Review programmes of 2010 and 2013 resulted in
significant restructurings of scheme benefits, which were accepted by
staff and unions through individual member consent;
In return for the liability reduction achieved through these
programmes, the Group agreed to increase its support for the
schemes by making matching contributions
There remains a further c.€300m of asset contributions expected
to be made between 2017 and 2020, these contributions have no
impact on Fully Loaded CET1
Allowing for the remaining asset contributions, the overall Group
IAS 19 deficit would have been c.€0.15bn at Dec 16
In addition to the IAS19 accounting valuation, the funding position of
the main BSPF scheme is also shown under the Minimum Funding
Standard basis and the Actuarial / on-going basis
Does not impact Fully Loaded CET1 ratios
2The MFS surplus includes the new 2016 Pension Authority requirement to hold additional Risk Reserves
3BSPF (Bank Staff Pensions Fund) represents approx. 75% of the overall Group DB liabilities
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