Investor Presentaiton
90
A.P. Moller-Maersk Annual Report 2020
Financials
Consolidated financial statements
Notes index
Note 14 Pensions and similar obligations - continued
Table 14.3
Life expectancy
65-year-old male in the UK
2020
2040
2019
31 December
2039
Table 14.3
21.8
23.2
21.6
23.0
The sensitivity of the liabilities and pension cost to the key assumptions are as follows:
Table 14.4
Increase
Decrease
Sensitivities for key assumptions in the UK
Factors
'Change in liability'
2020
2020
Discount rate
Inflation rate
Life expectancy
Increase/(decrease) by 25 basis points
Increase/(decrease) by 25 basis points
Increase/(decrease) by one year
-101
61
140
106
-59
-136
Table 14.5
UK
Other
Total
UK
Other
Specification of plan assets
2020
2020
2020
2019
2019
Total
2019
Insurance contracts
1,734
69
1,803
199
58
Shares
77
137
214
179
131
Government bonds
379
107
486
1,403
99
257
310
1,502
Corporate bonds
Real estate
331
86
417
652
79
731
10
4
14
9
4
Other assets
160
13
173
248
17
13
265
Fair value 31 December
2,691
416
3,107
2,690
388
3,078
Amounts in USD million =
Rates of life expectancy reflect the most recent mortality
investigations, and in line with market practice an allow-
ance is made for future improvements in life expectancy.
The Group assumes that future improvements will be in
line with the latest projections of 1.25% for all UK plans.
Table 14.4
The liabilities are calculated using assumptions that are
the Group's best estimate of future experience bearing
in mind the requirements of IAS 19.
The Group's plans are funded in accordance with applicable
local legislation. In the UK, each plan has a Trustee Board
that is required to act in the best interests of plan mem-
bers. Every three years, a formal valuation of the plan's
liabilities is carried out using a prudent basis, and if the
plan is in deficit, the Trustees agree with the Group or the
sponsoring employer on a plan for recovering that deficit.
In 2020, the Trustees of one of the UK plans, Maersk
Retirement Benefit Scheme (MRBS), entered into an in-
surance contract to provide further security for all future
benefit payments and annual increases to which members
are entitled under the scheme. Following this MRBS buy-in
transaction, over 70% of the UK liabilities are now covered
by insurance policies. Therefore, movement in the liabilities
due to change in assumptions would equally impact the
assets value related to the buy-in policies, resulting in a
reduced movement in the overall balance sheet position.
The expected contributions to the UK plans for 2021 are
USD 11m (USD 23m in 2020) of which USD 9m (USD 20m in
2020) is deficit recovery contributions. In most of the UK
plans, any surplus remaining after the last member dies
may be returned to the Group. However, the Merchant
Navy Ratings Pension Fund (MNRPF), and the Merchant
Navy Officers Pension Fund (MNOPF) contributions paid
by the Group are not refundable in any circumstance and
the balance sheet liability reflects an adjustment for any
agreed deficit recovery contributions in excess of defi-
cit determined using the Group's assumptions. In 2020
an adjustment of USD 3m (USD 2m) was applied in this
respect.
Table 14.5
Other than the insurance contracts and a small proportion
of other holdings, the plan assets held by the Group are
quoted investments.View entire presentation